Enterprises struggling with cash flow problems often resort to loans to meet their funding requirements. For instance, entrepreneurs apply for a business loan when they plan an expansion, face a working capital deficit or decide to purchase the latest equipment.
Though availing business funding has become much easier over the years, prospective borrowers still need to follow several steps to secure it successfully. This is why it is often advised to apply for a business loan only after becoming familiar with the steps involved. It helps to meet the requirements readily and streamline the overall process without delay.
Simple steps to avail a business loan quickly
Follow these steps below to simplify your borrowing experience –
Step 1 – Check whether you qualify for the loan or not
Having an idea about the loan eligibility protects applicants from getting their plea rejected and, in turn, prevents the erosion of their current credit score. Generally, applicants are required to meet these criteria to qualify for business funding –
- They should belong to the age group of 25 years and 65 years.
- Applicants should have a credit score of over 750.
- The vintage of their business should be a minimum of 3 years old.
Note that different financiers may require applicants to meet additional requirements.
Step 2 – Identify your requirement and how much capital would be enough
A qualifying individual should apply for a loan amount based on the quantum of working capital their business needs. For instance, cash strapped businesses struggling to meet operating expenses may first find out their working capital gap and then proceed to apply for a loan amount that helps account for the shortage successfully.
Step 3 – Compare interest rates
Business loan rates depend on several factors, including loan quantum, applicant’s creditworthiness and tenor. Individuals are still advised to find out more about the prevailing business loan rates to pick the most competitive one. Furthermore, individuals are also recommended to factor in the additional charges to make an informed choice.
Generally, leading NFBCs like Bajaj Finserv are quite transparent about the accompanying charges and provide clarity right from the beginning. They also provide pre-approved offers to customers that make the entire process of availing and repaying loans simpler. The said offers are available on financial products like credit cards, personal loans, business loans, etc. Check your pre-approved offer online with your name and contact number.
Step 4 – Pick a suitable repayment tenor
Since business loan rates tend to get influenced mainly by the loan tenor, business owners must pay attention to the selection process. Usually, a longer tenor attracts higher business loan rates, mostly because of default-associated risks.
Also, borrowers have to pay relatively higher interest on loans available for a longer tenor as the same is calculated on the outstanding balance. Individuals can use a business loan EMI calculator to understand the impact better and choose a tenor that suits them the most.
Step 5 – Find out the about documentation
A loan application is verified with the help of the applicant’s documents, among other things. This makes it essential for businesses to submit the required documents to facilitate the process.
In most cases, applicants have to submit KYC, proof of address and identity, proof of business ownership, etc. However, they may be asked to submit additional documents depending on their lender to qualify for the loan option.
Step 6 – Know the process of application
Once everything else is in place, individuals should check out the steps involved in both online and offline processes of applying for a business funding option. This will help them select the most convenient method readily. Usually, the online process requires individuals to fill up an application form available on the lender’s web portal and app.
Lastly, individuals should also find out whether the business funding option they intend to avail requires them to pledge any asset as security. Most leading financial institutions tend to provide business loans without any collateral and may sanction a loan amount of up to Rs.45 lakh to eligible applicants to meet various requirements effortlessly.