Must to Know Facts to Get a Small Business Loan

Key Points That Will Help You Get a Small Business Loan (SBL)

1. Types of Small Business Loans:

There are different types of loans in this category that one can opt. For example, if you have an asset to put as collateral, you can opt for a secured loan that brings down the interest rate. Similarly, there are loans specifically meant for a particular purpose like the working capital loan that helps you to manage daily operations. The loans also differ depending on amount disbursal, for example, a line of credit allows to take out only a part of the loan amount sanctioned. It’s advisable to study these different types and pick the one that suits your needs the best.  

2. Research on Available Lenders:

Always go for a lender with a past record of providing financing solutions to small businesses. Lenders with a thorough understanding of business goals, requirements, and compulsions along with the ability to access financial situations can prove to be a long-term partner.

3. Every Lender’s Loan Qualification Criteria is Different:

Different lenders have different conditions of eligibility. Some may put stress on the credit score while others may only consider profit and loss statements. So, do not lose heart on being rejected by one lender.

4. Be Prepared with Financial and Legal Documents:

Since it is a fast process, keep your documents ready to avoid any delays. These documents will include proof of identity, age, nationality, and residential proofs like Aadhaar, Voter ID card, PAN card, Passport, and Driving License. You need to show registration papers of your firm, various work permits/licenses, profit-loss statements, IT returns, balance sheets of the company, personal and business credit score along with KYC details of partners and board members.

5. Draft a Full Proof Business Loan Application:

Those who are able to show a detailed business plan are more likely to get their loan applications accepted. Don’t present broad numbers; instead, give specifics to assure lenders that the business will have enough profit and cash flow to settle the debt on time. Explain the anticipated costs of operation, the USP of the product, the target group, the marketing strategy, etc. along with future projections.

Conclusion

Even though there are plenty of lenders offering Small Business Loans, getting them requires careful research and preparation. To reap the benefits of such loans, the business owner must research about the types of loans, eligibility criteria, documents required, and other terms and conditions. Applicants must do their proper homework before applying, learn from previous rejection, and correct those errors. Once approved, these loans will get you the capital funding that can take your business to greater heights. 

Know more about SME & Commercial Loans.