- Why do you need a loan and how much?
- Know how many options are available to get a loan
- Choosing the right and quick loan option will prove beneficial for your business
- Collect all business documents and its detailed information
- Keep your online presence updated
- Understand the loan procedure of lenders
- Decide what you can keep as a guarantee
- Review the proposed business loan terms thoroughly
If you are considering to expand your small business, then you will need cash for various activities, so that you can take the company in the right direction. Small business loans can be taken from various banks, lenders and NBFCs. But when it comes to raising business funding, you should know what the lender wants from you to give a loan.
Today we are going to tell you 10 such things, which will make your business loan process easier.
Why do you need a loan and how much?
This is the first question you should ask yourself while planning to take a small business loan. Because many lenders will ask you this question. You have to satisfy the lender with your answers. By reviewing how much your business is established, it will be easy for you to know how much amount you should apply to get. Do not guess the amount you want. Know the reasons for your business funding through these categories
– Buying raw materials or inventory
– Buying machines or equipment.
– To increase or expand the infrastructure.
– Increase team or hire staff.
– Marketing or advertising expenses
– Repay other business expenses
Through this review, you will be able to raise monthly repayments and will also pay interest without any hassle.
Know how many options are available to get a loan
Before diving into the pool of credit, consider the various different lending options and decide what is best for your business. Banks like traditional lenders are always available. But now non-traditional lenders like NBFCs are becoming famous. They provide loans to medium and small and small scale industries. Apart from this, you can also turn to these options.
– Credit Unions
– Crowd Funding
– Personal loan
– Business Credit Cards
– Non Profit Micro Lenders
Choosing the right and quick loan option will prove beneficial for your business
Find out about lenders: Today the loan market is full of lenders who are ready to take loans. But before choosing, do research thoroughly. After understanding their advantages and disadvantages, shortlist such lenders who are ready to give loans at affordable rates. It usually includes banks, NBFCs, peer-to-peer lending and venture capitalists.
Check your credit score: It is very important to find out your credit score. This is because only the lenders will be able to know the level of your credibility and risk based on your credit score. Therefore, before applying a small business loan, check your company credit report (CCR). Maintaining personal credit score is very important for first time borrowers.
Lenders may also consider that.
Put your financial statement in the correct order: After knowing the credit score, put your financial statement in the correct order. The lenders review these statements very carefully, given the nature of the loan and its size. So keep in mind that the statement of profit and loss, balance sheet and cash flow statements are updated and correct. To improve the chance of business funding, get financial statements checked by an experienced public chartered accountant.
Collect all business documents and its detailed information
To get a business loan, apart from financial statements, there are many business documents that you have to assemble. So be prepared with these documents in advance.
– Business Name
– GST registration
– List of business executives and their background
– All legal documents (memorandum, deed and LLC)
– Projected Financial Statements
– License Agreements
– Business Credit Report
– Financial statements of the principal shareholder / business owner.
– Business Plan and Executive Summary
– Income tax returns of last 2-3 years.
– PAN card and identity card.
Keep your online presence updated
Lenders for small businesses can check the internet or social networking sites to check the background of your business. What stakeholders and customers think about your business, the online information of the business owner and the industry’s thinking about your business tells them a lot about your business. So before applying for a small business loan, update all these things in your favor.
Understand the loan procedure of lenders
Different lenders have different business loans. Be sure to review their loan application process. When you get to know about the process very well, then the application process also becomes easy. These days most lenders put their requirements and terms and conditions online. All you have to do is go to their website and gather all the information related to the loan procedure and benefits.
Decide what you can keep as a guarantee
It should be decided in the beginning that if the lender asked for it, then what will you keep as a guarantee against the loan amount. This guarantee protects the interest of the lender. Many times lenders also ask for personal assistance in the form of a guarantee. Stay away from such lenders as much as possible. Before placing your property as a guarantee, find out its true value. However, if you have nothing to guarantee, then move to unsecured business loan. This is because here you will get a loan without any guarantee.
Review the proposed business loan terms thoroughly
The last step is to read everything carefully before signing. Because once signed, the arrow will go out of command. Therefore, understand every detail of the agreement and check that there is nothing hidden in it. Apart from this, check foreclosure charges, processing fees, penalty fees and other hidden charges. Apart from this, if you compare these terms and conditions with other borrowers, you will still be able to make better choices.