Hesitating to apply for a business loan because your turnover is too low, or you don’t have enough collateral? Don’t give up just yet! First, without capital, your dream of running your own business and becoming financially independent may never take off.
According to Business Insider, 82% of small businesses fail because of cash flow issues. Secondly, not every lender follows the same process when reviewing your application for an SME loan. Success depends on finding the right lender who can grant your request for business loan instant approval.
Here are some ways in which you can boost your chances of business loan approval, hopefully at the very first attempt:
Compare loan providers online
Thanks to loan aggregators, there is a wide array of providers you can choose from based on your unique requirements in terms of tenure, the amount required, interest rate, etc. What’s more, many non-bank finance companies use alternative credit strategies to process loan applications faster. So go through every lender’s requirements and processes carefully before making a choice.
To avoid disappointment, carefully check whether you meet the prescribed eligibility criteria of the lender before you apply for a business loan. Most loan providers require you to be of legal age, have a steady source of income and have proven business/professional credentials that qualify you to start your venture.
Additional Read – 5 Simple Ways to Improve Your Chances of Getting a Small Business Loan
Check your credit score
If you have defaulted on unsecured loans in the past, your credit score would be impacted. However, if you have taken steps to consolidate your debt or settle it, you may be able to find favor with lenders. To better your chances, you can include a debt settlement plan along with your application to prove that you are taking steps to up your credit score.
However, the lender will still consider any residual balance that was waived during the settlement process to decide to grant you the loan.
Additional Read – Why Credit Score is Important While Availing a Business Loan
Provide accurate and complete information
You’d be surprised to know that the majority of business loan applications are declined because of easily avoidable mistakes in the application form. Lenders have a variety of verification tools available at their disposal to authenticate the information you provide to them. In the event of incorrect or insufficient information, your loan is likely to be rejected right away. There could be legal implications as well.
High debt to income ratio
If your annual EMI outgo equals 40% or more of your income, the lender can assume that you may not be able to repay on time. In such a situation, you may need to leverage any asset – either owned by you or a business associate – as security. Alternatively, you can opt for a collateral-free loan for business.
Finally, include a strong business plan accompanied by a cover letter to let lenders know how you intend to utilize their money.
If you are looking to get a quick business loan, look no further than from Tata Capital. Tata Capital’s loans are easy to get with minimal documentation and affordable interest rates.