How to Improve Your Business Loan Application

While financial institutions are ready to provide assistance to the budding organization, entrepreneurs often hurt their chances of securing business loans. Optimizing the business loan application is the easiest way to ensure fast and proper credit sanctioning.

There are several ways to enhance your business loan application to perfection. A good application, along with the business loan documents in order, significantly increases your chances of loan approval.

Ways to improve the business loan application process:

1. Have a sound business plan

Most NBFCs lend money at a reasonable business loan interest rate, based on the business plan a prospective borrower presents and the success rate projection. Therefore, it is crucial to convince the lenders of your efficiency. A detailed and creative business plan, including your cash-flow projection and an in-depth description of how the funds will be utilized for various business needs, would really help your case.

It would help if you also prepared an inventory of all items involved in the business. This creates the impression that you have an airtight business plan.

2. Seek a realistic sum of money –

For a borrower’s loan application to be successful, it is important to be realistic about the amount of money you ask for from the lenders. Asking for too much can lead to rejection.

Most NBFCs want to work with business savvy, responsible borrowers with pristine business loan documents, who know precisely how much cash they require to implement their business plans. Therefore, it is advisable not to guess, but actually, sit and crunch the numbers and come up with the exact amount required to fulfill your business needs.

3. Check eligibility beforehand –

Every financial institution has its own set of eligibility criteria that every applicant must meet if he/she hopes to get a loan issued. Instead of having your business loan application rejected and getting an unnecessary hit on your credit score, you could pre-check whether you qualify for this credit.

The general criteria are minimum annual income, minimum turnover of past businesses, minimum and maximum age, etc.

Include all business loan documents –

Most business application rejections happen because of incomplete documents. One must present the exact right facts, figures, details, and achievable goals. Prepare a checklist of all the documents that need to be showcased for the loan application.

Know what type of loan you require –

Understanding the kind of loan that is exactly right for a certain kind of business need is imperative. Seeking the incorrect loan type may slow down the process and can even lead to rejection.

Maintain good credit health –

Lenders usually access a borrower’s credit report as part of the loan sanction process to investigate their credit health. A good business credit score results in smooth business loan disbursal. They may even receive a better business loan interest rate in accordance with their credit report. In contrast, bad credit history can drastically reduce the approval rate. Prospective borrowers must make sure they have never defaulted in their previous borrowings and kept good credit health.

Understand the whole lending process and apply to the right NBFC –

Various lenders offer business loans based on the need and size of your business. It is essential to organize your business finances, and understand the lending process on each platform and thereby apply only to the lender that can lend you the fund your business requires based on your needs, despite whatever shortcomings you have in your credit history.

What are the business loan documents required for a loan application?

The following are required for a business loan application:

Cover letter
A detailed description of your business plan
Collateral documents
Financial statement
Credit history
Details of the management team
Marketing plans

To ease a borrower’s loan application process further, top NBFCs and financial institutions, like Bajaj Finserv provides pre-approved offers to make financing simpler and less time-consuming. The offers are available across several financial products such as personal loans, business loans, and more. You can check your pre-approved offer quite easily by providing the necessary information like name, contact number, etc.