6 Things to do Before Applying for a Business Loan
Are you stuck and unable to arrange for finances to grow your business?
Are you finding yourself in a situation of misery when arranging funds on your own for sustaining a business is difficult? And you consider it is inevitable to go for a business loan.
Then this post will be useful for you in making a wise and informed decision while availing a business loan.
Back then availing a Business Loan was a tedious process, but thanks to the advent of technology that has made it simple and hassle-free. Situations have changed significantly, more so for good reasons.
But for the first-time users obtaining a business loan can be quite a task of convincing the business ideas, and vision to the lender. You might find yourself in situations of struggle to get the financing done by the lender. Having a decent credit and good revenues is good but without what’s below, it will be a challenge:
- Research the financing options
Don’t fall for the first option that comes your way. A lot of research is necessary before finalizing the lender. Look for the options and adjust the plans that seem to give you the best deal. Continue being a good observer and you will find one that is a perfect fit for you.
Plan the loan amount to be borrowed
You may be eligible for a higher loan amount, but go only for the sum which you are falling short of. Unnecessarily you’ll struggle to repay the loan amount and end up-up paying higher interest. Find out how much money you are falling short of exactly. Accordingly, apply only for the exact needed amount.
Also, try to arrange the down-payment and less of a business loan to keep the interest at minimal. Just in case a few things go unplanned and the requirement increases, try keeping the amount a little bit higher, to cater to the unexpected fluctuations in the business.
Check your CIBIL report
To get things easy and convenient for you, keeping the credit report updated is a must. The first thing a lender will assess is the credit report of the borrower to determine the creditworthiness in meeting payment on loans. Your past track record will be the game-winner in getting you the business loan.
Have another option in place
Businesses always face ups and downs, therefore it is important to choose a loan repayment option that is flexible. Few lenders require Plan B as collateral to pay off the loan. Be careful in what you use as collateral. You can take assistance from some trusted person who can guide you through the process.
Know what the loan will cost you in the end
Understand and figure out an estimate of the fees and payments that will go towards the loan repayment. Understand all the terms and conditions attached to the loan, before deciding which loan lender to go about. Knowing the exact details will let you figure out the proceedings accordingly.
Keep Financial Statements Ready
A financial statement of your business will give the lender a clear picture of past and present details. Show the lender the plan that you follow and the numbers achieved till date and future targets. It will enable the lender to see your goals and will be comfortable lending the money.
Show them how you will use the money to grow your business taking into account the seasonal fluctuations that might erupt in businesses. Include all cash flow statements, income statements, and balance statements, depicting the financial details.