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How to Improve Your Odds Of Procuring A Business Loan

  • Highlights

  • Have a robust business plan

  • Ensure you have a good credit score

  • Gauge the amount of money needed backed by numbers

  • Research on various lenders to find the right one for you

Procuring external funding is a challenge for SMEs looking to take their business to the next level. Lenders look for certain credentials before approving a loan. Here are a few steps you, as an SME owner, can take to meet the lending norms and improve the odds of procuring a business loan.

Prepare a business plan

Lenders want to know where their money is being put to use. Therefore, having a well-thought-out business plan with your cash flow projection, future plan, and all supporting documents, will improve the chances of approval of the loan. You also need to provide a blueprint for revenue generation to instill confidence among your lenders about loan repayment.

Decide how much you need

You need to have an idea of the amount you require to meet your goals. While overestimating would lead to higher cash outgo every month, underestimating would defeat the purpose of the loan. It is, therefore, important to have a well-thought-out budget supported by financial projections and numbers to your lender to show that you’ve done your research and know the amount of money you need.

Improve your credit score

Your credit score indicates your money management skills. It tells the lender about your creditworthiness. Hence, having a good credit score is extremely important to get approved for a loan. Paying your bills, EMIs, and any other liabilities on time improves your credit score. Additionally, opening multiple credit accounts and maintaining your credit utilisation ratio at around 25% with all of them would be ideal as well.

How To Get Small Business Finance From Bajaj Finserv

Research on lenders

It is essential for you to research on the potential lenders before procuring a business loan. With the emergence of non-banking finance companies (NBFCs), the lending landscape has undergone a sea change. Some of the leading NBFCs are offering flexi business loans where you can borrow the amount as and when required from your pre-approved loan limit. It’s crucial to compare the offerings from various lenders before making the final decision.
Lastly, remember that proper planning will save you a lot of time and effort, when it comes to procuring financing. So, research well and be prepared before applying for a business loan.

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