When you establish a business venture, you plan and work for the success, growth and expansion of the same in the future. To ensure business growth, you may need funds from time to time. These requirements may arise due to various reasons including purchase of raw materials or a new production unit. You can always depend on your savings for these funds but we advise going for a small business loan. A loan will help you in the long run as it will help you keep your savings intact and yet address the requirement for additional funds.
However, availing such a loan can sometimes be a real task. Due diligence and scrutiny is conducted by lenders before approving any business loan application.
Here are 5 ways that can boost your chances of availing a small business loan.
1. Careful Evaluation of Your Credit Need
Before you apply for a small business loan, evaluate your credit need first. Be sure amount you need by calculating it towards the end objective. If you do not have a clear vision on the usage of the funds, you won’t be able to convince the lender either. A proper plan that showcases your financials and operations in the past, present, and future will help in getting a swift approval on your loan application.
When the lender is convinced that you know what you are doing, they will be happy to approve your loan application. Whether you are taking the small business loan to buy inventory, expand the workplace, purchase machines and equipment, or as working capital, you have to evaluate your needs before submitting your application.
2. Proper Organization of Your Documents
To avail a small business loan from Clix Capital, you will need to submit some important documents, including the following:
- Completed loan application form
- Passport size photograph
- Identity Proof, which may be your Aadhaar Card, PAN Card, or government ID if you are a government employee
- Address Proof, which can be your Aadhaar Card, passport, driving license, voter ID card, or utility bills for the last 2 months
- Proof of Ownership
- Financial Documents, which include the following:
- PAN Card for a firm, company, or individual
- 6-months bank statement
- Copy of the most recent Income Tax Return form
- Computation of income, audited balance sheet, and profit & loss account for the last 2 years
- Proof of continuity of the business of 3 years, which can be your sales tax certificate, establishment, ITR, or trade license
It is advisable to keep your documents in order, as they play an extremely crucial role in demonstrating your financial stability. Presence of proper records help in availing a small business loan much more easily and quickly than otherwise.
3. Maintenance of Credit History
Besides documents, lenders also refer to the applicant’s credit history before making a decision on loan applications. Your credit history largely depends on your credit behavior in the past, including your credit card bill payments, loan EMI payments, credit mix, and other factors. So, small businesses applying for SME loans must ensure that their credit history has high credit standards with a credit score of minimum 725 or above.
4. Development of Good Financial Standing
If you require funds for your small business, then proving your financials would be worthwhile. Whatever your purpose is for taking credit, ensure that you have strong financials and you have been acting responsibly towards your personal and business credit. Apart from these, your business should be a private limited company, a proprietorship, a closely held non-listed company, or a partnership firm involved in trading, manufacturing, or services. You must also have a minimum turnover of ₹ 1 Crore.
5. Ability to Explore and Compare Different Lenders
You will find many lenders offering small business loans to businesses looking for funds. However, you need to compare them and choose the one that offers the best of terms and conditions. You should base your decision on factors like loan amount, interest rate, collateral requirement, eligibility conditions, documentation requirements, repayment terms, and customer service.
Clix Capital offers small business loans of up to ₹ 50 lakhs without any collateral requirement. We also offer flexible repayment terms such as a tenure of 12 to 36 months for businesses and 12 to 48 months for self-employed individuals..
You can also reach out to us at firstname.lastname@example.org or call us at 1800 200 9898