A good CIBIL score improves your prospects of getting a business loan. It can also help reduce the processing time of your loan application and get you finances at a lower rate of interest. But, apart from your credit score, you will have to maintain a good credit score for your firm too. This increases the lender’s trust in your business.
Ways to maintain business CIBIL score
Consolidate and repay all your business debts
Numerous on-going loans are not a problem, as long as you make it a point to repay them on time. But unpaid debt, like multiple credit cards dues or missed EMIs, will bring down the CIBIL score for your business. Consolidate all your business debt with ease using a customized Bajaj Finserv Business Loan. This gives you access to funds up to Rs. 55 lakh at nominal interest along with flexible repayment options. Paying multiple debts with different EMI deadlines is harder than one debt at a low interest. So, paying off your debt in this way will boost your credit score.
Borrow funds only once you repay existing debt
When you are running a business, you are bound to face situations where you need finances. However, you may not need to take a loan to meet the costs every time. Take an advance from clients or pay your vendors only when you receive payments to improve cash flow. Borrow an affordable business loan only after market research to find the cheapest loan and once you know exactly how it will contribute to hiking business revenue. Planning your repayment in advance will further help you pay EMIs on time and boost your credit score.
Additional read: How to finance your business?
Lease machineries and land to avoid unnecessary loans
Rather than tackling every business need with a loan, be judicious about your needs. Multiple application for a loan decreases your credit score. So, first check your CIBIL score and only apply for one when you really need it. Say, you get a large order for aluminium wires. To fulfil this order, you will need specialised cutting machinery. Rather than taking a loan for immediate purchase, lease the machinery so you can pay for it from your working capital funds.
Maintain a good cash flow and invest in business assets
Rework the operations of your business and alter payment policies for both the vendors and suppliers. Maintain a stringent payment guideline to give your business access to regular income and a working capital. Divide this income into two parts, and use one part to fund the everyday needs of your business. Use the other part to buy assets for your business such as a warehouse for stocking products, the latest machinery etc. Over a period of time, you can cash in these assets for paying off business debts on time if needed.
Additional read: How to check CIBIL score?
Boost the credit score for your business through these simple alterations and get a business loan when you need it most to increase your profitability and expand your reach.
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