How will you feel if banks reject the first business loan that you needed badly? However, there can be various reasons for the rejection of business loan applications. You are not the only one who goes through such situations. In fact, there are Small business loans are available from a large number of traditional and alternative lenders which can help one’s business grow, fund new research and development, help you expand into new territories, enhance sales and marketing efforts, allow you to hire new people, and much more.
How to apply for business Loan?
Applying for any kind of loan is pretty hectic and when it comes to business loans it automatically becomes the herculean task. It has been generally seen that loans for business purposes are hard to get us there is a big risk in lending such a big amount.
The financial institution is the platform that can give your business strength and stability by providing business loans at lower interest rates. All you have to provide some details like name, Mobile no., loan amount, etc. They offered the complete bouquet of working capital facilities to help you manage your cash flow and ensure the smooth running of your business.
- Address Proof
- Last 2 years Balance Sheet
- Last 2 years Profit & Loss statement
- Company Registration Details
Some points to be kept in mind before the business loan application
Understand Your Need
The first thing to do is to identify the need for which you are seeking a business loan.
Taking a loan without knowing the purpose can land you in trouble. Your funds may be much higher or lower than you actually require. While a higher amount may increase the burden of repayment, a lower amount may not fulfill your needs and affect your business operations.
Remember, in the end, it’s only you who’s going to repay the loan, so you should have a detailed idea of how much amount you need and for what.
Lenders take you more seriously if you provide detailed information and justify your loan need. You can even get a business loan for startups.
Identify a Suitable Lender
Whether you want to opt for traditional lending (visiting banks in person and completing the process) or modern lending (online)? Which bank or NBFC you would like to obtain a loan from? Do you have collateral to acquire secured business financing or are you thinking about an unsecured business loan?
There are various things to consider before zeroing in on a particular lender that suits your needs. There are numerous financing options available to small business entrepreneurs. It’s your call to choose which lender you consider the right fit. This decision could be based on factors such as the interest rate, loan term, and the terms and conditions of the lenders. Know the requirements and what lender needs to provide a business loan. It is a good idea to take a business loan from a lender which is all at best.
How Quickly Do You Need Funds?
If you need money urgently, it is advised to apply through online lending platforms such as Biz2Credit. If you have the documents in place, and your loan application is successful, your request can be approved quickly, and funds will be credited to your account (online) in much lesser time as compared to traditionally approaching a bank.
The traditional lending process is always slow and rigorous, but Finbucket platforms have sorted out this issue successfully using technology.
Do You Have a Business Plan in Place?
Preparing a strong business plan can help you with getting a business loan without much effort. Your business plan will act as proof of how you will use the money; how you are planning to make profits through your business and how will you repay the loan amount.
Lenders will be more certain about lending you if you show them a well-drafted and feasible business plan. The plan must have well-projected financial inputs and a sufficient cash flow plan to cover operational costs.
Do You Have a Collateral?
Collateral is something valuable that you pledge as security for repaying a loan and could be forfeited by the lenders in case you default.
It could be a property, inventory, equipment, or any other asset which can be fortified and sold by the lender if needed, in case of loan default on your part.
If you have collateral, you have higher chances of getting a loan, because it works as a financial assurance to the lenders. Most banks and NBFCs ask for collateral to approve the business loan.
However, if you lack any collateral, some online lenders can give you a loan for a personal guarantee such as your personal assets and your credit score. In this case, the interest rates could be significantly higher