How Do I Qualify For A Business Loan?

You need to have a profit-making business or a solid business plan if you want to land a good business loan offer. You should also be able to pledge collateral and guarantee to support the loan amount.

Business loans are mostly secured loans. They are high-risk loans for lenders as the income is not guaranteed in any business.

If you need a business loan with a high loan amount and attractive interest rates, you have to ensure the following:

Have a solid business plan – Chalk out a good business plan to impress the lenders. The plan should illustrate your vision for the business in the near future and how you intend to monetize it.

Documents to support the profitability of the business – Lenders don’t want to support loss-making businesses. Show relevant documents to prove that your business has been making a profit. They may seek document proof for the last 2-3 years.

Offer substantial collateral and guarantee – You should be ready to pledge some good value collateral if you want a high loan amount. Collaterals are usually given in the form of company assets like buildings, land or equipment. Secured loans usually get you a good loan offer.

Have a clean tax record – It is important to pay all your taxes on time and have a documentary proof for that. Lenders do not want to lend to borrowers who do not fulfil their duty to the government.

A healthy credit score – Last but not least, ensure that you maintain a healthy credit score of 750 and above to land good business loans.

Points to remember:

Lenders look for only one thing while sanctioning a loan; will the borrower repay the loan on time? That credibility is determined based on factors like your credit score, repayment history, your profit statement and your future vision for the business.