The country witnessed unprecedented financial challenges in the last two years, where the economy faced a downturn due to the global health crisis. As a result, the SME and MSME sector, which contributes significantly to this country’s GDP and employment, faced a difficult time.
Since the country is proceeding toward economic revival, both existing business owners and entrepreneurs are seeking credit facilities like a business loan to manage their day-to-day operations. Besides managing financial crunch in the business, borrowers can use such advances to purchase inventory, finance operational expenses, expand a business, etc.
For a hassle-free and prompt process, borrowers need to be aware of certain aspects to ensure quick approval.
5 tips to avail finances for growing your business
Here are some of the tips that borrowers can follow to improve the chances of getting such collateral free loans without any hassle.
Tip 1: Present a proper business plan
Before approaching a lender for credit, it is ideal for curating a plan for the business. It is important for any company to have future projections and a roadmap, and lenders assess this and the business’s annual revenue before sanctioning a loan.
The borrower needs to ensure that this plan is convincing enough to pursue a lender to extend the credit. Additionally, borrowers need to keep the necessary documents handy to ensure a hassle-free small business loan approval.
Tip 2: Select loan amount and tenor wisely
It is always necessary to make an estimation about how much working capital a business needs, including associated monetary requirements. Without knowing about the required loan amount, it is wise to avoid making an application for business credit. However, to improve the chances of loan approval, it is ideal for applying for the exact amount that one requires, and not more than that.
Apart from these, it is essential to pick a suitable tenor to keep the loan EMIs in check.
Tip 3: Maintaining a decent business credit score
The credit score is one of the crucial aspects that lenders consider before sanctioning any loan. Since this score is a reflection of the borrower’s repayment capacity and creditworthiness, it is always suggested to maintain a CIBIL score of 685 and above. In this regard, borrowers must know how to maintain a good business credit score to ensure smooth business financing and improve the borrowing experience.
This will help them to find a business loan deal at a competitive interest rate. Moreover, this will help borrowers to negotiate with the lender on loan terms for a better interest rate and reduce their overall financial burden.
Tip 4: Check eligibility requirements
Irrespective of the credit facility individuals apply for, they need to check eligibility parameters specified by a lending institution. There are certain factors that are usually assessed by a lender when sanctioning a business loan, such as CIBIL score and business vintage.
Therefore, it is beneficial for borrowers to take note of these parameters and meet them to avoid any chances of rejection.
Tip 5: Choose a lender wisely
Various lenders in the market extend a business loan. However, not everyone offers a loan deal suitable for a particular business. Therefore, it is essential to find a financier that meets one’s requirements.
In this regard, it is wise to conduct in-depth research and compare available lenders before finalising one. A meticulous study of a lender’s qualifying parameters, loan guidelines and benefits holds utmost significance.
Apart from these, borrowers must understand and manage multiple factors impacting the terms of business loans to ensure quick disbursal of funds.
Few reputed lenders like Bajaj Finserv stand out with their customer-friendly features like the pre-approved offers. These offers are available on many financing options such as personal loans, business loans, credit cards, etc. These offers are available for existing borrowers and help them avoid the hassle of lengthy documentation and save time. Therefore, existing borrowers can check their pre-approved offers by mentioning their names and contact details.
One of the most significant challenges young entrepreneurs or even existing businesses faces is managing daily operations without any interruption. So, individuals planning to apply for a business loan consider these pointers mentioned above to find a suitable loan deal to grow their business.