Make a crisp plan: Before applying for a business loan, you must draw a crisp plan explaining the revenue model, application of capital, estimated growth, estimated sales, and estimated profits. Explain to the lender how you will use the money to grow your business.
Look for the best deal: Don’t fall for the first option that comes your way. Do your research before finalizing the lender. Be a good observer and look for the plans that seem to give you the best deal from the increased competition among lenders.
Plan the loan amount to be borrowed: Even if you are eligible for a higher loan amount, you should apply for the amount you are falling short of. Calculate exactly how much you require and only borrow what you need. Additionally, make the down-payment higher to keep interest low.
Clearly mention the purpose of loan: If you are able to clearly state your goals on paper, it will be easier to explain to the lenders exactly what you need. This will show that you are taking this seriously and you aren’t trying to take the easy route.
Check your credit report: Updating your credit report is extremely important. An initial assessment by a lender is to check the credit report of the borrower to determine the creditworthiness to repay a loan. An outstanding past track record is the key to getting a business loan.
Have option B in place: Businesses always face ups and downs, hence you should choose flexible loan repayment plans. Few lenders require Plan B as collateral to pay off the loan. Be careful while using collateral. If necessary, take guidance from a trusted person to guide you through the process.
Keep financial statements ready: If you are planning to apply for small business loans, banks will look for the most recent year’s financial information as it will give them a clear picture. Show the lender the plan that you follow and the numbers achieved to date along with future targets.
Prepare documents in advance: Apart from the basic information about the financial reports, keep the other documents handy. These documents include a business license, lease of property, and proof of ownership.
Calculate the overall loan cost: Find out an estimate of the fees and EMIs that will go towards the loan repayment. Understand all the terms and conditions attached to the loan, before deciding the lender. Knowing the exact details will let you figure out the consequences attached.
