5 Types of Business Data That Impact Business Funding Ability
A successful business requires steady cash flow. Inadequate funding has been a major roadblock for businesses in India, according to a recent study by the IBM Institute of Business Value (IBV), which found 65% of venture capitalists blaming lack of funding for the failure of Indian start-ups.
Cash crisis forces businesses to opt for business loans. These loans become essential to address various needs of an organization. Today, the market has many lenders whom enterprises can approach for loans.
“While companies do a lot of homework to zero in on the lender, it requires even greater efforts to set critical business data right before applying for a loan,” points out Dilip Makhija, an independent financial analyst in Mumbai.
He further says, “With cases of bad loans on a rise, lenders have become more cautious while lending and want to be sure about repayment.”
Lenders injecting cash use various formulae to find out business loan eligibility criteria and interest rates. These depend on several data points. Thus, it’s essential to maintain these points for the smooth approval of a loan.
Revenue helps lenders understand the earning potential of a business. Higher revenue boosts the chances of qualifying for larger loans. We, at Bajaj Finserv, offer loans as high as Rs. 30 lakh at competitive interest rates.
Business loan eligibility criteria depend on a company’s balance sheet. Companies must maintain a complete account of their assets and liabilities as per requirements for smooth approval of loans.
Most lenders take a close look at a company’s fixed assets in the balance sheet. Often used as mortgages, these assets can determine the loan eligibility criteria. Lenders can fall back on these assets in case of non-repayment. However, business loans Bajaj Finserv don’t need any collateral, as we rely on a good credit score to determine eligibility.
Business Credit Score
Credit score plays a crucial role in the loan approval process. In some cases, it also determines the interest on a business loan as well as its tenor. Paying bills on time, limiting credit usage, using the business’s name in bill payment, and filing annual returns on time goes a long way in boosting the credit score of the business.
Bank deposits reflect the financial health of a business. When cash inflow is higher than outflow, lenders perceive the company to be stable. High cash inflow often makes businesses potential targets for investors and vice versa. Lenders may also use information related to a business’s bank deposits to determine the eligibility and interest rate of any loan that the business owner applies for.
Social media is everywhere. In the digital age, behaviour on social media platforms affects business loans as well. Today, online reputation management has become crucial to qualify for a loan. Lenders watch the activities of a company and its owners on platforms like Facebook, Twitter, LinkedIn, and others to judge their creditworthiness.
Positive interactions with customers on these platforms go a long way in establishing the goodwill of a company, and therefore its potential to retain and acquire customers. On the other hand, negative comments and poor reviews hurt a company’s brand image and its eligibility for a loan.
Maintaining these five crucial data points are key factors in determining whether a business will get the required funds on time. In the changing economic scenario, the timely availability of funding may determine the difference between the success and failure of a venture.
At Bajaj Finserv, we offer a seamless procedure for the processing of the documents required for a business loan. With minimum paperwork, loans up to Rs. 30 lakh, a flexible line of credit facility, and online account access, our Business Loans are designed to help growing businesses succeed.