A business loan is one of the most important things in the growth of your business. It can lead to growth as you grow your funds. Having more funds means that you don’t need to wait for the revenues to invest in new things. But the thing is you can’t always get what you want all by yourself. There are certainly other things and certain other factors that have a say in whether or not do you get a business loan. A business loan with a co-applicant can solve your problems in cases when you don’t get a loan up to the desired amount. The reason for the rejection can be your salary, your credit history, your company’s profile. They may not be up to the desired amount and loan tenure. If you don’t get the desired loan, you may want to add a co-applicant for your loan who adds a different source of income. A loan with a co-applicant is known as joint finance.
Who is a co-applicant?
A co-applicant is a person who applies along with the borrower for the business loan. It will act as a supplement for your loan eligibility. If your credit history is good, then only you can be eligible for the business loan and then the co-applicant will be considered but if your credit history is not good, then you will not be eligible for the business loan and the co-applicant will not be considered. Co-applicant can’t help if the borrower is not eligible.
Who can be co-applicants?
- Your parents
- Your children
- Your brother
- In case of the company loan, co-owners of the company
Who can’t be co-applicants?
- Friends and relatives
- Married daughter and parent
A co-applicant becomes completely liable for the repayment of the loan amount. If the applicant doesn’t pay the EMIs or if he/she defaults, refuses or dies, then the co-applicant is liable to pay for the EMIs. the adverse effect of being a co-applicant is that it affects your credit history as well. It will have the marks of the defaulted case.
Having a co-applicant can be a boon for any person. It is like an extendable storage to your PC which will increase your capacity. He also helps you get you instant approval for the loan instantly. It will also help you get a loan of increased amount. This will help you supplement the amount of the business loan. Also, the banks will offer lower interest rates if the background of co-applicant is healthy. This also gives added tax benefits to the applicant and co-applicant.
Having a co-applicant can help you get the desired amount in less time and very efficiently. You can satisfy your desires even if your income is not as per banks’ criteria. Before applying for a joint finance, you must have a clear picture of all the aspects. The co-applicant improves the entire creditworthiness of you securing the loan. Adding another applicant will add to your benefits. So you should consider having a co-applicant before applying for a business loan.