When you start your own business after leaving a job, it is undoubtedly one of the best feelings in the world. You are now your own master, you can do things the way you like them, and there is more need for you to any other person’s orders. The returns you will generate are directly proportional to the efforts, hard work, and time you put in. As they say, with great power comes even greater responsibility. Well, the saying holds true in this case also.
Only you are responsible for getting your small business off its feet through the infusion of your personal funds or ones borrowed from friends and relatives. But after a certain period, you might start feeling a paucity of funds. Now, you have no savings left of your own to invest in the business. Or you cannot borrow from any of your relatives. But it is essential to invest more money to keep the business growing. Moreover, you are not a big corporate with a contingency or emergency reserve. Now, what can you do?
In such a scenario, your best option is to opt for a business loan from any of the various small business loan lenders operating in the market.
What is a Business Loan?
A small business loan is a credit facility extended by the financial institutions operating in the Indian market. As the name is self-explanatory, business loans are meant for business purposes only. That is, the amount borrowed should be used for business-related purposes only. As per the nature of the loan and amount required by the borrower, business loans could be secured and unsecured. Besides, there are various requirements for which dedicates loans are designed, such as working capital, machinery purchase, payment of expenses, term loan, Flexi loan, etc.
The business loans is an ideal option for a business owner like you to meet a temporary liquidity crisis without diluting the ownership pattern. As such, there are other ways of availing funds for your business, where you need to give away a part of your ownership.
Moreover, as the business loan is repaid in easy monthly installments, there is no additional pressure on the cash flow of the business. It does not put any pressure on you to worry about – just repay the loan in easy monthly payments. In most cases, the interest expense paid on a business loan is suitable as a business expense, thus resulting in tax savings as well.
To avail a business loan, you can use the online lending platforms which offer unsecured business loans to meet various funding requirements of yours. Firstly, you don’t need to offer any security to get access to the funds. Secondly, your business loan application is processed in a quick time and at a competitive rate of interest.
Checklist to get a Business Loan Application approved
Getting a business loan application is not that difficult. It doesn’t require a lot of planning but following some careful steps. These steps help in overcoming the hurdles which you may face while getting the business loan application approved by the business loan lender. Following are the five 5 points that you should keep in mind before applying for a business loan:
- Check your CIBIL: your CIBIL score is a numerical representation of your creditworthiness. It is the single most critical factor that determines your business loan eligibility. Ideally, your CIBIL score should be over 700. But if it is below 650, then you must take out your credit report. Look for all the discrepancies and work towards correcting them to improve your credit score. You need to hold your application until your CIBIL score is at the desired level.
- Prepare Business Loan Proposal: whether you are applying for an unsecured loan or secured loan, you must prepare a detailed business loan proposal. Notably, it must cover all the aspects of the loan application, including the repayment plan. This helps prove your seriousness to the loan lender.
- Assess your Requirements: always remember that a business loan is meant for business-related expenses only and not for personal usage. So, carefully assess your exact business requirements and then only compare it with your business loan eligibility. Once you are satisfied that your eligibility is higher or equivalent to the lender’s requirement, your business loan application would be approved quickly.
- Do your Research: nowadays, all financial institutions have specified their business loan criterion online on their website. So, before moving an application, you should perform thorough research and identify those loan lenders, whose eligibility criteria you can fulfill.
- Documentation and Follow-up: prepare multiple copies of all your financial, personal, and accounting records, such as KYC documents, income tax returns, GST returns, bank statements, etc. All business loan applications require detailed financial documents for processing. If you have all the business loan documents ready with you, your application won’t face any delays. Also, make it a point to keep following up with the lender regarding the progress of the loan application.
With the excellent flexibility offered by business loans in terms of financial independence, you can now take your venture to newer heights without anything holding you back.