Most successful businesspersons were not born rich. They all started small and acted smartly in their endeavour to become successful. Many people try to achieve success in their business, but due to multiple reasons, they may have dropped their ambition in the mid-way. Not getting a business loan could be one of the reasons for a setback in the business career.
Well began is half done! Hence presenting a good impression about your business plan is vital in getting a business loan successfully. If you had been rejected for a business loan earlier or want to apply for one to boost your start up, here we have put together some of the important tips that can help you get your business loan approved. Read on to know more about it.
1. Present a sound business plan
The lenders will lend to you the money based on the business plan you are going to present and the projection of the success rate. Hence it is vital to convince the lenders with a sound business plan. Create a detailed plan including cashflow projection and how the money will be used for machinery and business operation. Prepare an inventory of all the items that are involved in your business. This will give an impression that you have a sound business plan.
2. Check your eligibility
Every bank has set certain eligibility criteria which an applicant must meet. Instead of facing loan rejection unnecessarily and getting a hit on your credit score, you can ensure that you qualify for each criterion and make your business application vibrant. The general criteria are minimum turnover of the past business, minimum and maximum age, minimum annual income and number of years in business.
3. Include all the documents
Most of the business application rejections happen due to incomplete documents. You need to portray the right combination of figures, facts, achievable goals and details. Prepare a checklist of documents that need to be submitted for the application. Make sure the following list of items are added in your business loan application.
· Cover letter
· Detailed description of your business plan
· Loan amount and its usage
· Your credit history
· Details of your management team
· About marketing
· Financial statement
4. Maintain a good credit health
Lenders generally access your credit report as part of the loan process to check your credit health. A good credit score earns you a business loan at better terms while a bad credit history can reduce the approval rate. Make sure you have not defaulted in your previous borrowings and maintained a good credit health.
5. Understand the lending process and apply to the right lender
There are different lenders who lend business loan based on your need and size of the business. Apart from banks, there are NBFCs, online lenders etc. It is important to know about the lending process in each platform and apply only to the lender who can lend to you based on your need despite the shortcomings in your credit history.
There are myriad options available to get a business loan. Applying to the multiple lenders would only hurt your credit score. Hence make a sound business loan application by checking the given tips above and get a business loan successfully.