When it comes to applying for a business loan, there are many intricate steps involved. Before disbursing the loan, the lender has to make sure that your business will generate sufficient funds for you to be able to pay your EMIs. Evaluating this can take a fair amount of time, even when you do everything right.
But, if you make a mistake while applying, the approval and disbursal process may take even longer, or worse still, your application may get rejected.
Additional Read: Step by Step Business Loan Application Process Explained
To make sure that your application receives approval and that the business loan disbursal-process does not take long, you must adhere to the guidelines discussed below.
Improve your credit score
If your credit score is unsatisfactory, your loan application will most likely get rejected. And even if it doesn’t get declined, your lender will charge a higher business loan interest rate. That will only make it more difficult for you to pay back the borrowed amount, which will further hurt your credit score. Also, in such cases, the lender takes longer to disburse the loan.
Therefore, if you’re looking to take on a business loan, apply only after checking your credit rating. If you have raised a dispute with the bureau of credit, apply for a loan only after they settle it. Otherwise, the lender may reject your application on the grounds of inaccurate information.
See that you meet the eligibility criteria
To meet the business loan eligibility criteria, you must be between 25 and 65 years of age. Also, if you are self-employed, your business should be profitable for three financial years consecutively, and the turnover of the company must exhibit an upward trend.
Prepare your business plan
When applying for a loan, prepare your business plan meticulously. You will have to share this plan with the lenders and convince them that your business will make enough money to cover the loan. Tell them why you need finance, and what you plan to do with it.
Doing this indicates that you are committed to repaying your loan. Your plan should clearly and elaborately explain what your business does, and how exactly does it make money. You can use an online business loan calculator to see if your company is eligible for finance, based on your business plan and projections.
Get your documents in order
The lender will ask for the balance sheet, profit and loss statements, and cash flow statements of recent years. Therefore, you must get these records audited by a certified Chartered Accountant, and keep them handy.
Apart from these, you will also require tax filings, business incorporation certificates, identity proofs, and address proofs. Ask the lender about the necessary documentation and prepare accordingly to fast track your business loan approval and disbursal process.
To sum up
Get a loan for your business at competitive interest rates and minimal documentation at Tata Capital. We offer various tools like business loan EMI calculator, prepayment calculator, and foreclosure calculator to help you explore different repayment options. We have years of experience in the industry and offer dedicated after-sales support. Visit our website today for more details.