Here’s How Smart Planning Can Help You Get Your Ideal Business Loan
Most entrepreneurs are excited about the prospect of obtaining a loan for business, but at the same time, are worried about making a mistake that could have a negative impact on finances. To combat this all you have to do is prepare an effective loan proposal, which lists out the purpose for which you will utilise the loan, the business potential it can generate, the repayment strategy you have, etc.
Things to Check Before Availing a Loan:
- Create an effective executive summary where you can highlight your company strengths, industry details, your competitive advantage as well as the skills, experience and qualifications of each member of the management team.
- Put together a sheet of all key financials of the company as your lender will examine this information closely in an effort to understand your track record and your capacity to repay the loan.
- Create a detailed marketing plan for your company and its future goals and keeping both short-term and long-term objectives in mind.
- Outline the exact purpose for which you plan to use the loan, and the business opportunities it may generate. Look at the best case and the worst case scenario when you do this to get a better idea.
Next, think from a lender’s point of view. Here are some basic things that you might have to prepare beforehand to get a business loan:
Prove your creditworthiness:
Lenders look at your personal credit history when they give business loans. The trick is to demonstrate that you are a creditworthy business owner. If you are new to this business, can you show past success in managing a similar business in another field (even if you weren’t the owner)? You can also ensure that your personal debt repayment record is clear and has no red flags. If you have outstanding debt, pay it off and only then apply for a business loan.
Create an online marketing plan:
These days, going online is the key, and it is very easy for small business owners to put forward the best picture of their company in digital media. There are various tools that guide small business owners in creating a basic, downloadable business plan and offer essential elements like cash flow and financial projections. You may want to do this and be ready for any questions you are asked regarding your business opportunities and loan utility.
Pre-evaluate business loan rates:
It is important to evaluate what would be the possible business loan interest rate that your company can afford. Analyse what your company is generating in terms of returns and profits and how a loan can help it ramp this up. Use a business loan EMI calculator like this one to see what loan amount, tenor and interest you think works for you.
Best practices to follow:
Lenders today provide business loans online with minimum documentation. When you apply for a loan, it is very important to project all the facts in the right manner, be honest about every bit of information and do your research when choosing the right lender who is as transparent as you are.
Lastly, collect all supporting documents:
When you apply for an unsecured business loan, you will probably need to submit financial documents and account statements as well as proof of the business’s existence and how many years it has been in practice. Check all the required documentation before you apply for a business loan, to hasten the process.
To sum up, make sure you look for a business loan in the right place for the right reason. Look for a lender like Bajaj Finserv, which gives you the leeway to use the funding as per your choice with affordable interest, speedy online application and approvals, advantageous facilities like line of credit and a flexible tenor.