If you’re wondering how to fund for your business for the first time, you may have a barrage of questions. For small and medium enterprises (SME), a loan can offer just the push they need towards growth. That is why banks and NBCs offer business loans exclusively designed to meet the needs of such small and medium-sized enterprises. Here’s all you need to know about the process if you’re a first-time SME loan applicant
1. First-Time SME Loans: Getting Started
For small businesses, securing a business loan is no mean feat. Because new, small businesses are a riskier option for lenders compared to a big company, they find it harder to secure funding. However, some new-age NBFCs have relaxed their eligibility criteria and even offer specialized SME loans.
2. Build Your Credit Score
The higher your credit score, the better your chances of securing a small business loan. If you are looking for funding for your small business, your credit score will indicate your reliability and ability to repay the debt to the lender. The idea is that a person who is responsible enough to pay off their debt will display the same conscientiousness with their business. If you have a good credit score, your SME Loan options will also multiply. To build a good credit score, remember to pay your credit card bills on time and keep your utilization low. Apart from paying your bills on time, also keep checking your credit report for errors.
3. How Much Do You Need?
If you’re getting an MSME loan for the first time, borrow only as much as you need for guaranteed approval. Whether it is expanding to a new area, buying machinery, or paying your staff, don’t borrow more than you can afford to repay. Moreover, clearly articulating the reason for taking out the SME loan is also something your lender will require before approving your application.
Additional Read:- Why Credit Score is Important While Availing a Business Loan
4. Keep Documents Handy
When you apply for an SME / MSME loan, you will be asked to furnish documents like ID proof, address proof, business licenses, bank statements, etc. So, before you apply for an SME loan, keep these documents ready with you for a smooth application and approval experience.
5. Choose the Right Lender
Because there are so many banks and NBFCs offering SME loans today, you must conduct the right amount of research before choosing one. Selecting the right lender could mean the difference between higher and lower MSME loan interest rates, rigid and flexible EMI options, hassle-free application process, and easy and difficult eligibility. Making the right choice will ensure that you enjoy a smooth loan application and repayment process.
Additional Read:- Benefits of Availing Unsecured Business Loans from NBFCs
Looking for funds to expand your small business? At Tata Capital, we offer unsecured business loans with flexible repayment options for small and medium businesses. To get an understanding of the EMIs, you’ll be paying, use the business loan EMI calculator on our website. Plan your monthly interest instalments and repay the loan with ease.
With Tata Capital, securing an SME loan is easy and quick. We only ask for basic KYC documents and bank statements to approve your loan application. Get in touch with us today to learn all about our MSME loans.