6 Ways to Prepare Your Organisation for A Business Loan
As per recent reports, 56% of small-scale businesses apply for small business loans to expand their operations, execute a new business plan, go after new opportunities or acquire new assets. This is because not every business has sufficient liquidity to meet the above-mentioned needs. Many individuals begin with the initial capital available to them and for further requirements, avail loans or consider different options.
Availing a loan is not a matter to be taken lightly, but if all the steps leading to it are taken cautiously, it can be an absolute boon for a business. An example of this is the Indian state of Gujarat, which has experienced unprecedented growth in its industrial sector due to the easy access to a business loan in Ahmedabad.
However, it is important to be prepared as an organisation before availing small business loans.
6 Ways to prepare your organisation to avail small business loans
- A detailed, well thought out, comprehensive business plan –
Any NBFC official who looks into a loan application will want to know everything about an applicant -starting from the company, repayment capacity, client references, company staff strength, and more. NBFCs also look into the type of product or services that are rendered through said business. There needs to be sufficient information, and the business purpose should be legal and legitimate for the loan to be approved.
- Maintain a clean credit report –
Sometimes there could be some mistakes in your credit report. If it isn’t corrected, it might negatively affect your credit score. This is the reason why one must always monitor their business credit and personal credit reports on a regular basis. In case you realise that there may be some errors, reach out to a credit reporting agency immediately to correct and raise the score by rectifying the discrepancies. Otherwise, a loan sanction could prove to be difficult.
- Maintain proper financial records –
Acquiring small business loans become easier when you can produce proper financial statements. NBFCs will want to check your balance sheet, income statements and cash flow statements so as to assess whether or not you have the ability to repay the loan. This is why all business owners should have good financial habits.
- Gauge the exact fund amount required –
When applying for a business loan, it is advisable to conduct thorough research so as to not underestimate or overestimate the total amount you need to borrow. Having a proper budget with accurate financial projections is one of the ways to be a successful small business owner.
- The time of loan request –
When you apply for a loan is vital. During the times of economic boom, availing a business loan approved is much easier as compared to applying for a loan during a recession.
- Meet the required eligibility parameters –
Though the eligibility criteria vary from lender to lender, following are the most common parameters that borrowers need to comply with to avail the loan –
- Loan applicants must be running the business for at least three years.
- Indian resident with no criminal record and age within 25 to 65 years.
- Business’ IT returns should be filed for at least the past 1 year.
- Credit score of 750 or above.
- The business set up should not be under any blacklisted category.
- An established business which is in operation for more than 6 months.
To simplify things further, some top NBFCs and financial institutions provide pre-approved offers to make financing easier and less time-consuming. The offers are available on several financial products such as personal loans, business loans and more. You can check your pre-approved offer easily by providing essential information like name, contact number etc.
Keeping the above-mentioned points in mind will make the process of availing small business loans much easier and hassle-free, benefitting your organisation significantly.
Author Bio: Rachael is a content writer at DrWatson, who has written on a Ultimate Resume Guide, from colored diamonds to SEO software, cbd vape uk In her spare time, she enjoys singing, sketching, cooking, and video games.