Small businesses are believed to be the power house of the Indian economy. However, these businesses are scared of the complex lending process through the physical centers. This can be really frustrating for the takers & providers both.
Too many times, we observe how growing companies reach a saturation point when they do not how to find suitable funding. Financial lenders also have a business to run with profits, so they will only approve borrowing according to their norms.
Ways to Improve your Chances of Getting a loan
Having said that, we still have ways to improve your chances of getting a loan. Here are the things to keep in mind:
- At-least for once, think like lenders usually conduct business. Think like lenders do. Treat it like a job interview where you have go out prepared with your strengths & weaknesses. Lenders look at your overall financial standing & thoroughly assess the reasons for your need. They may also scrutinize your financial assets to be kept as collateral if any all required.
- This clearly shows how dedicated a business owner is about his work & ethics. Next in line comes the cash flow and creditworthiness as the main deciding factors. Just knowing your small set up, ideas & vision is not good enough.
- Even to get required funding, you need to approach the prospective lender in a certain way. Look as if you don’t desperately need the money, then you’ll more likely have it.
- Firstly, understand you monetary needs well. It’s not okay to ask for money over & above your requirement. This is one of the reasons why their proposition stands rejected.
- Pick up lessons from your mistakes. And if the lender institution rejects your application, then look into the reasons for it. And when you go for your next round of funding, go all decked up with solutions.
- If you have poor credit position within a business-to-business environment which has receivables to show as collateral. Other lenders known as Internet lenders charge very higher interest rates with manageable standards of eligibility.
Remember to note all the above mentioned points on priority when dealing with Small Business Administration-backed lenders. Many small businesses incorrectly think that they don’t meet the criteria, when that’s not true. SBA loans are usually on low interest rates and flexible repayment terms. So if just one or two lenders refuse your proposal, don’t give up. Just keeping trying your luck.
Analyze what you’re really getting into. This actually talks that the annual percentage rate (APR) of the loan must be calculated in advance. Learn about the fees, charges, prepayment penalties, etc. Stay as informed as you possible can.
Also Read: 5 Reasons to Get a Small Business Loan
Also, experiment with online lenders if traditional lending methods fail especially for those with bad credit rating. Though, online lenders are known for their poor transparency & inflexible terms of lending. So be doubly sure before you engage in any kind of money exchange. you’re still budding & should avoid unnecessary hassles. Be doubly sure to make an early payback.
Check out smaller banks as they are sometimes better than bigger/ sloppy banks who like to deal with high-value customers only.
