Mistakes made while looking for Business Loan
Investment capital is a prerequisite for starting a new venture or expansion of an existing business.
Business loans offered by various banks and other financial institutions can give wings to your idea and help you implement it in the real world.
However, there are certain pre-requisites that a lender looks for before granting a loan to any business.
If you are also considering the idea of taking a business loan, here are the: some things you should keep Keep this in mind while applying for it.
1. Low CIBIL Score
A CIBIL score is a proof of creditworthiness of a borrower. While a high CIBIL score increases the chances of a loan application being accepted, a low score can have a negative impact. Hence, it is advisable to maintain a good CIBIL score through disciplined financial practice.
2. Incomplete Documentation
Along with the application for a business loan, the borrower has to submit a series of other supporting documents including documents related to KYC, income proof and establishment details. Not having the necessary paperwork can be a big red flag for your business loan application.
3. Business not registered
Before applying for a business loan, it is important to get your enterprise registered. Not having a business venture can reduce your chances of loan application approval.
4. No future road map
In addition to the present value of the business, lenders also consider the prospects of the enterprise when considering a loan application. A business plan that presents the vision and future of the business, along with market analysis and a projection of revenue and profit, will strengthen your application.
5. Not being well versed with loan terms and conditions
Before voiding your business loan, it is important to understand the terms and conditions. Lenders can levy hefty processing fees and other charges while clearly promising low interest rates. This is likely to take your total borrowing cost to a higher level.
Comparing business loans offered by other lenders in the market can help you save a huge amount of money before making a final decision.