Need a Business Loan? 3 Things to Know Before Borrowing

One of the primary reasons for failure of any business is lack of funding. Before you go for borrowing money to any bank, NBFC, or an alternative P2P-NBFC lending platform, here are a few lender’s requirements to keep in mind. You must know what lenders are looking for you to give yourself the greatest chance on loan approval. What lending platforms are looking for – Every lending platform has its own set parameters to approve or disapprove a loan request. However, broadly your focused areas should be these: 1. Cash flow: You must showcase a well-managed cash flow along with the inventory. 2. Debt: Lender’s, in general, prefer a clean payment history. But, debt is not bad if you can show a track record of on-time payment and lower debt-to-income ratio. 3. Revenue: lenders will only invest in your Business Loan request when they see it as a growing asset. You overall revenue should be high and growing. Do you meet the minimum borrowing criterion? Every lender has their own minimum eligibility requirements. These include your business vintage, minimum revenue generated and good standing. Most lenders will ask you last six months or 1 year of business ITR to know how much revenue you have generated. You must work on it before going for borrowing. Your Documents Should all be in Order: Now that you have a fair idea of what lending platforms look for when processing a business funding application, it's time to gather all the required documents to apply for a Loan for new Business. With P2P lending platforms, every loan applicant is treated on a case-by-case basis. So, they may request you a document that they won’t ask another applicant. It's useful to have all delineated documentation in order: 1. Bank statements: last six months 2. Income tax returns 3. Proof of ownership 4. Business licenses 5. Canceled check 6. Personal identity documents: Driver's license, PAN card, Aadhar card etc. rnWith these documents in place, you may enjoy the added benefit of faster business loan approval, which is particularly useful if you need the funds immediately. Minimum Credit Score for Business Loan Approval For some specific loan types, lenders strongly prefer to see your credit report. A business loan is one such loan. If your credit score happens to be on the low side, then your chances of loan approval are also low. However, with a good credit score and well-maintained credit history, your chances of loan approval and acquiring a the low-interest rate on the loan is high. Putting it all together! Both traditional financing institutions and alternative lending platforms are making more loans. As a small business owner, you need to Check Loan Eligibility and various business loan requirements, which may vary as per the choice of your lending platform. Among these fluctuating factors simply take care of parameters to save your time and hard work.