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Basic Requirements to Get A Business Loan

  • Highlights

  • Make a clear and detailed business plan

  • Show proper track record of work experience

  • Maintain a good business credit score

  • Ensure the revenue potential of your business idea

There is a myth that getting a business loan is very difficult. You can find many people sharing their experience of not getting a business loan easily. This is not correct. In fact getting a business loan is much easier than getting home loan or auto loan. The documentation required for business loan is also bare minimum. You only need to take care of some key factors to avail the facility without any hassle.

Clear Business Plan

When you are seriously in the business, you already have a roadmap in your mind. Just note it down in paper and you will have your business plan ready. The financial institutions look for a proper business plan as it represents the idea, ability and planning of the business man. Make sure your business plan has specific and attainable goals. The assumptions made should be realistic with sustainable growth forecast. With a proper business plan, you can answer more than half of the questions of lender.

Business Track record

Other than the future projections, another very important aspect is the past performance. If you have managed any business your own, the financial institutions will be interested to know how you had managed that. Even if this is your first venture, still your previous experience and expertise is considered. The only thing they are interested in whether you are capable enough repaying the loan timely.

Additional Read : How to Prepare Your Organisation for a Business Loan

Credit Score

In any loan, your credit score plays an important role. It is more important in case of business loans. Based on it, the lenders not only decide whether to sanction or reject the loan application. The rate of interest also depends on the credit score. Normally any score below 500 is considered sup par resulting either rejection or higher rate of interest. Because this credit score represents your financial discipline, you should be extra careful keeping it above an optimum level.

How To Get Small Business Finance From Bajaj Finserv

Documents needed for business loan

Business loans from Bajaj Finserv are designed specially to help growing businesses meet their financial requirements. Easy to apply for and hassle-free to avail, these loans come with several unique benefits that make them the ideal mode of business finance for small and medium sized enterprises, such as a Flexi loan facility that lets you borrow when you need, and prepay when you can. They require only a minimum of documentation to apply for, which you can view below.

Revenue Potential

Although it will be covered on your business plan, Revenue is discussed separately as it is the lifeline of your business. Let face it: without revenue your business will not be able to survive. And the lenders will be extra cautious in evaluation of your revenue projections. Make sure they are realistic and the chance of achieving them is high. Also they should be high enough to repay the loan and give you good return.

Additional Read : When is the Best Time to Get a Business Loan

Quality of Cash Cycle

It is particularly important for existing businesses. The quality of cash cycle should be good. Particularly realisation of debtors should be at an acceptable level. The bad debts or write offs should be managed properly. Once you maintain a good level in this area, it shows the strength of your business which in turn helps the lenders sanction your loan.
Businesses are inherently risky and the lenders remain cautious about their money. However that does not mean that business loans are impossible to get. If you show them good potentials the lenders will be more than happy to sanction your business loan.

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