Your business may need an infusion of funds for a variety of reasons be it working capital requirements, equipment purchase or finances for growth. The best way to finance these needs may be by taking a loan. Just like when you take a personal loan, a lender looks at your personal credit score, when you apply for a business loan, a lender studies your business’ credit score before sanctioning you the loan.
A business credit score of 750 and above is considered ideal, and allows you to access a larger loan amount at a more nominal interest. So, if you find that your business’ credit score is not up to the mark, take steps to improve it. Here’s a look at why doing this is important.
To Speed up the Borrowing Process
When you look to borrow funds for your firm, a good credit score not only increases your chances of approval but it also helps you get approval faster. It creates a credible identity for your business in the eyes of the lender and therefore gives your application a boost.
To Get a Higher Loan Amount
You may need funds to smoothen out cash flow issues, to lease factory space or to buy production software. In all three cases, you will need a substantial amount of money. A high You may need funds to smoothen out cash flow issues, to lease factory space or to buy production software. In all three cases, you will need a substantial amount of money. A high credit score shows that you are responsible with borrowed funds and so, puts you in the position to negotiate a higher loan amount.
Additional Read: How To Check CIBIL Score
When you apply for a Business Loan from Bajaj Finserv, you can get up to Rs. 45 lakh to meet all your business needs. Features like online application, quick disbursal and Flexi Loan facility make this loan one of the best in the market.
To Benefit from Lower Interest Rates and a Flexible Tenor
Having a high credit score makes it easier for your firm to get the loan at a lower interest rate. Since your credit score is substantial, lending to you will not seem like a risk and lenders will not feel the need to cushion the rate to protect their interests. Similarly, you have better chances of choosing a tenor of your choice that is in line with your financial situation. So, you can pick a long tenor, if need be, repay the loan with ease and continue to maintain your business’ strong credit score.
Additional Read: How To Improve CIBIL Score
So, it is evident that the benefits of a good credit score are many. However, it is important to note that your company’s credit score is dependent on various factors. These include considerations such as timely repayment of debt, suitable credit card usage and repayment, the number of unpaid debts acquired over a period of time and the type of debts your business acquires. So, to improve your business’ credit score you will have to focus on these aspects.
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