Successful access to suitable business financing is all about the preparations that you have made beforehand. Your business’s high revenue and flourishing venture does not guarantee that you would secure the required advance conveniently. For that you need to look for a few essential factors, and correct them in time before you apply for small business loan.
So, you may want to look out for the ways that can help improve your chances of availing the right business funding quickly without much hassle. We thus bring you a few important pointers to take care of before applying for business financing with a selected lender.
Application for Business Loan – Top 5 Things You Must Consider
Create a detailed business plan and state purpose
A business should at all times be clear regarding its objectives and future goals with a detailed insight on all related aspects like finances, capacity expansion, operations requirements, quality or product or services, etc. A detailed business plan in place not only sets clarity in place but also makes the lender aware of your strategies in when seeking business financing. You would thus be depicted as a thoughtful businessperson.
You must also list down and state all the purposes for which you require financing and estimate the loan amount accordingly when planning to apply for a small business loan.
Keep all important financial statements ready
A well though-out business plan also paves the way for easy repayment when you borrow funds. You must thus identify the sources that assist in loan repayment with the help of essential financial statements.
You can thus keep all of your business’s financial statements ready before applying for a business loan with your selected lender. They can include balance sheet, profit and loss statement, cash flow statement, funds flow statement, etc.
Consider your collateral-based and collateral-free financing options
Business financing for small ventures is available as both collateral-free and collateral-based funding. You would need to choose between the two based on your requirement for the funding quantum and the available assets that you can collateralise.
Note that collateral-based business funding is available in big ticket at affordable rates, albeit involving a lengthy financing process. Meanwhile, although a collateral-free small business loan involves interest at a notch higher rate, it is a short-term financial commitment with reduced liability and quick processing for emergency funding. You can choose between the two based on their individual merits and demerits.
Check your personal creditworthiness
While a business’s credit score is important in small business financing, one must keep his/her personal creditworthiness high too. Make sure to check it before you apply for a small business loan. You can improve your personal creditworthiness by keeping your credit habits in check like making timely and full repayment, availing a balanced credit mix, etc.
Analyse all available borrowing options
After having been through the above pointers, you can start finalising on your business loan option by comparing the available offers in the market. Check interest rates and other accompanying features based on your funding needs and decide.
Once you have made all the essential considerations, you can proceed to apply for a small business loan with your selected financial institution. Make sure that you meet all eligibility requirements and have arranged all documents needed before you apply for streamlined application processing.
Also, take necessary steps for both personal and business credit score improvement to gain leverage for an interest rate negotiation with your lender. With sufficiently available funds, you can also pay off existing liabilities like small loans and advances to free up your finances and improve repayment capacity. Prefer to apply online for reduced paperwork and fast-tracked business loan approval.