Business loans help you in business expansion, boost working capital and purchase new machinery, among others. However, before applying for a business loan make sure you tick all these boxes.
Check your business and personal credit score
Your business, as well as personal credit score, plays a crucial role in the loan application process. They help lenders gauge your creditworthiness and whether you will be able to repay the loan on time or not. You can request your credit score and report from the available credit bureaus. Also, there are portals where you can check your credit score and report for free.
If your score is not up to the mark, take time to improve it and then apply for a loan.
Know the eligibility criteria and documents required
Make sure you meet the eligibility criteria as they differ across lenders. Today, most lenders list out the criteria on their website. If not available, it’s better to get in touch with the concerned representative(s). Lenders, ask for certain documents which generally include:
- KYC documents
- Passport size photo
- Business proof; certificate of business existence
- Relevant financial documents
- Bank account statement of the last month
The list of documents may vary across different lenders.
Prepare a solid business plan
Prior applying for a business loan, it is crucial to prepare a solid business plan. Your plan should outline:
- Your business objectives
- The way you want to utilise the funds
- Projected revenue model
- Repayment strategy
It is essential to review the plan to plug any loopholes. Discuss the plan in detail with your employees and the stakeholders to ensure it covers all the essential aspects of your business.
Fill the application form correctly
Prior applying for a business loan, make sure to fill the application form correctly with all the relevant details. Any error, however small it may be, can lead to a rejection. Make sure you fill all the details pertaining to your business correctly. If you are unsure about any detail, it’s better to clarify it from the potential lender.
The evolution of NBFCs has radically changed the lending landscape in India. With customised business loan offerings at competitive interest rates, they help you propel your business to the next level.
