India houses around 50 million SMEs and MSMEs, employing almost 122 million people as revealed by a CNBC survey in June 2019. An estimated 37% of the nation’s GDP (2 trillion USD) is generated from the small and medium scale businesses in the country.
However, a significant portion of those enterprises often faces scarcity of funds to expand their business expansion and boost profitability.
For a small venture to start or to keep operating – it requires ample amount of financing. Small firms can apply for business loans with financial institutions and NBFCs. Hence, it is essential to use a business loan calculator to estimate your EMIs to check whether the advance is affordable as per your financial portfolio.
So, if you are considering obtaining a small business loan, follow these guidelines to procure it in a hassle-free manner.
Check CIBIL score and review credit history
If you have a business vintage of less than 3 years, lenders will evaluate your credit history. Hence, before applying for a business loan, check if you hold a healthy credit score of 750 or more. Furthermore, check your credit history for signs of any errors. If you find any discrepancies in your credit report, inform the agency to fix it.
A good CIBIL score and clean repayment track record improve the chances of loan approval significantly. Besides, it also helps to avail advances at lower interest rates. However, you must always check the business loan eligibility criteria of your lender before applying for an advance.
Review your borrowing options
Leading financial institutions offer a competitive rate of interest, keeping in mind the competitive nature of India’s lending market. However, you must opt for a lender blindly. Weigh your options between prominent lending institutions and pick one that offers relaxed business loan eligibility. Along with it, check the interest rates offered and prepare your organisation for a business loan.
You can consider obtaining business loans from lenders like Bajaj Finserv, who offers less stringent eligibility requirements along with nominal paperwork. The existing customers can also further benefit from their pre-approved offers.
Prepare a good business plan
Even if you manage to arrange for finances, you would still require a strong business plan nonetheless. Besides, if a business owner does not have proper planning, he/she might not know how much funds is required or how fast he/she can repay the loan.
Moreover, financial institutions, at times, also ask for your business proposition to determine your eligibility for an advance. If you hold a sound business plan, you can estimate your revenue. This will help you to procure a loan amount as per your requirements using a business loan calculator.
Reason and amount of loan required
As a small business owner, it is crucial to determine the exact reason why you need financing. It can be to expand your operations, boost working capital, acquire equipment or maintain the cash flow.
Make a presentation
Apart from applying for business loans, you can also prepare a presentation of your business plan to make a compelling petition. A business owner can also arrange a professional package with financial statements and an official request.
You can also engage in a negotiation with your lender regarding the business loan eligibility criteria by presenting a solid business plan.
With this information at your disposal, procuring a small business loans is convenient. Also, be particular and organised when applying for a loan. Keep all the documents at hand before commencing the application procedure for a hassle-free loan approval process.