How can we get loan from bank for business?
Getting a business loan
Being an entrepreneur can be very exciting and at the same time very demanding. The process of creating something unique and offering it to consumers, can be exhilarating and frustrating in equal measure. A good idea and the passion to make it work is all that is required – at the same time one requires money to fuel the passion! A business loan could be the best way to raise funds to start a new business or expand an existing one.
Banks are notorious for the long and tedious process for sanctioning a business loans. This is because business owners and entrepreneurs must be able to demonstrate that their loan amount will be used satisfactorily towards increasing revenue. Additionally, they must not only possess a solid business plan and show growth in business, possible setbacks, etc., but must also possess a healthy credit score and have collateral to offer. This can make it difficult for small business people who don’t have much collateral on hand.
Following are a few simple tips you can follow to maximize approval of your business loan application:
Have a good business plan: This document is a significant factor in your loan being approved. Banks will lend you money if they think that you have a clear idea on how the money will be used and if they feel reassured that their money will be used productively. A clearly thought-out plan that includes projected cash flows, possible pitfalls, and ways to bounce back will reassure lenders that you have a sound business plan in mind.
Check your eligibility: Lenders have a set of eligibility criteria which could include a minimum turnover, number of years in business and minimum annual income. It is important to make sure that you qualify for each of these before you apply for the loan to avoid the possibility of being rejected. Get in touch with a representative and make sure you are eligible first.
Have the required documentation ready: Many loan applications are rejected because the documentation is incomplete. If necessary, speak with a bank official so that you have an exact list of the documentation required.
Size of the loan: It is important that you estimate the size of the required loan as accurately as possible. You should be able to justify the size of the loan you are applying for.
Ensure that you have a healthy credit score: If you have a good score, then your chances of being approved for a loan are much higher. If you have poor credit, take time to improve it before you apply for a business loan.