Every business requires a capital. Business Loan is one of the best way to get finance for your business. However, there are certain essential factors that you should consider before applying for the business loan. This is to ensure quick approval of loan. In this post, I will suggest certain basic steps that helps SEMs and small business units to get business loan.
How to get a Quick Business Loan?
- Why do you need a Business Loan?
The first question that bank or financial institution will ask you is why you need a business loan. You should be clear about utilization of loan before applying. Business loans are used for various purposes. It could be for purchase of raw material, machinery, office furniture or for working capital. The rationale behind your loan will decide the nature of loans available.
- Exploring Loan Options
You should explore various options available in market for businessman. Apart from bank, there are many lenders that provides business loans to SEMs. Few examples are cooperative banks, credit society, non-profit micro-lenders, peer to peer lending options etc.
The business loans are of various type like crowd funding, personal loan, over draft limit, business credit card etc.
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- Know your credit score
Another important step is to know your credit score. You can get free credit score information once in year from CIBIL website. Credit score is important aspect in deciding business loan eligibility. Mostly all banks and financial institutions checks credit worthiness of individual business owner by credit score.
- Capital Requirement
Money is lifeline for any business. Please calculate how much money do you need to borrow? Once you decide your capital requirement please find out how much money you can get via business loan.
- Time Period for the Loan
Another basic question you need to answer is time period for which loan is required. This is generally decided by business plan. Please also note that longer the time duration means higher EMI. Also check tenure offered by bank for the business loan.
- Prepare your Business Plan
You need to submit the business plan to the lender. Your business plan includes type of business, mission, vision and road map for achieving goals. It also includes ROI details and capital requirement for starting the business. Business plan provides prospective of your business to the lender and chance of getting loan is increased.
- Get the necessary documents
Business loan generally demands lot of documentation. The documentation requirement includes id proof, address proof, Income proof, business plan and additional information about yourself. Make yourself ready about documents.
- Short List the lender and apply for the loan
Next step is shortlisting lender. You should make comparison before selecting a lender. Once you are done with selection apply for loan by filling loan application.
- Wait for Approval
Business loan approval generally takes few weeks or months for approval. The approval time depends upon the document proof, your credit score and amount required.
If lender refuse the loan you need to find out reason for the rejection and try to address it. Remember that every time you apply for the loan your credit score is getting accessed and if loan is rejected your credit score drops by few points.