5 tips to get your business loan approved in the first attempt
Any new venture lays its base on establishing a strong clientele within the shortest period possible. Stocking inventory, employing new workforce and brand promotion comprise the necessary tasks for ensuring a venture's market presence.
In a nutshell, the most common reasons for startups and existing businesses to avail a business loan include:
Working capital financing.
Launching of product lines, and consequently, diversification in the long run.
However, new ventures are always seen as a risk owing to the absence of market assurance and a strong customer base.
Thus, a startup needs to ponder on that perfect Business Loan pitch to ensure the disbursal of its loan amount without encountering hiccups.
The following section throws more light on this:
1. Preparing a Strong Business Background
This comes within the ambit of a sound preparation before applying for a business loan. A healthy background preparation is of utmost necessity to all businesses in general and startups in particular.
When entrepreneurs approach financing institutions for business loans, he/she shall first need to make a pitch before its funders. A startup might ask, "I need a business loan for my startup. How do I go about it?"
An established business might have another question at hand, relating to financing expansions and diversifications.
But, irrespective of their requirements, funding houses consider them to be viable prospects for making a perfect loan pitch, only after an assessment of a few factors.
Clients they have and their feasibility thereof.
Cash flows to ensure timely repayments.
Target profit margins.
Previous track record (in case of existing businesses)
Note: Steady cash flows testify for a business's credibility, in the long run, thereby escalating its candidature for the sanctioning of quick business loans.
2. Exhibition of Credibility
Whether a company is in progress or just in its initial stages, they need to present themselves as likely prospects. The creditworthiness of prospects counts for a considerable worth in the decision of funders to give their final nod.
Thus, loan seekers have to be ready with just the apt business plan for a bank loan. Their strategies for overall management and operation have to be precise, realistic and presentable.
Lenders would want to know how prospects would put the fund to use. Therefore a sample business plan for bank loan has to have the potential for businesses to qualify as feasible for getting their respective applications sanctioned.
3. Knowing the Type of the Credit Needed
This might as well be considered as a part of the background preparation for a business. But the kind of loan differs in accordance with the business-in-question. Applications made after proper identification of the loan type, will definitely quicken the entire process of sanction and hence disbursal. Getting quick loans automatically becomes easier with prospects being able to pinpoint the kind of financing they require.
4. Expert Advice
A borrower must never underestimate the importance of expert suggestions, both with respect to ‘businesses with vintage', as well as ‘startups'. Expert advice comes within the ambit of preparing a solid footing for presentation to lenders.
As an assurance for themselves, lenders would want to know the depth of their prospects' comprehension of situations, both financial and otherwise. Hence, demonstrating that seekers of loans are in constant touch with their financial advisers, acts as yet another boost in the process of securing quick loans.
5. Restructuring of Capital Sources
Small businesses, in particular, might be heavily dependent on debts for capital financing. This might end up adversely impacting their credibility. However, a little financial planning to reduce debt and increase the proportion of equity would help on this front.
Businesses might as well seek expert advice to help them herein. As mentioned earlier, resorting to professional help has its own benefits.
For getting quick Business Loans for adequate financing, institutions like NBFCs are only a few clicks away. With facilities like collateral-free loans, minimal documentation, and a total disbursal time of under 24 hours, these institutions provide running businesses and startups with just the impetus they need. You can also get pre-approved offers from Bajaj Finserv that save your time and simplify the process of getting instant finance.