Capital is one of the most fundamental aspects to conduct a commercial venture apart from strategies and hard work. Every business requires liquidity for various purposes like infusing working capital, purchasing equipment, expansion, etc. Over the years, a commercial loan has become a viable option to suffice such requirements.
The emergence of Fintech companies like Bajaj Finserv has changed the lending landscape with their Commercial Loans. They offer Commercial Loans of a high amount of up to Rs. 30 lakh at competitive interest rates.
This unique scheme makes the process of availing loans simple and saves ample time of the applicants. You can also check your pre-approved offer by providing only a few necessary details.
Such loans provide cost-effective financial solutions to the business owners without requiring any collateral. Furthermore, fairly low-interest rates and flexible payment tenors also help them to repay the advance over time easily.
However, a good number of people are still unaware of the application process and tend to navigate haphazardly. Sticking to a checklist before applying for a business loan can ease the application process. Following are the few essential tips one can consider before getting started:
- Start with the credit score
Credit score happens to be the vital factor while obtaining a commercial loan. Lenders emphasize on the credit score of borrowers as it reflects their creditworthiness. A sound credit score assures the lender about an applicant’s repayment capability. So, it’s imperative to maintain a score of minimum 750 for getting approval.
For those who are still running low on their score, follow these few tips for fixing them at the earliest.
- Make a habit of timely payment of bills, EMIs, dues, and other liabilities.
- Delimited credit utilization.
- Consolidate all existing debts, if any, under one single advance.
- Retain old credit accounts
Practicing these methods is just how you can maintain a good business credit score to make your business loan availing process easier.
- Consider the loan amount
This is another crucial factor borrowers must consider avoiding over or underestimation of commercial loans. Overestimation of loan amount can attract debt in the future days whereas underestimation potentially holds the risk of financial crisis. Hence, a borrower must have a proper budget as a part of the checklist before proceeding with further financial projections.
- Have a strong business plan
To help an organization grow and secure a loan, a healthy business plan is essential. Having a definite plan helps the lender to get a clear idea of its mission and vision. So, it inevitably allows the borrowers to get commercial loans as a great business plan remains imprinted in the mind of lenders.
- Understand the fine print
Borrowers must be careful about every detail before signing the dotted line. They must stay aware of the repayment structure across the tenors. Usually, lenders provide convenient repayment tenors ranging between 12 months and 96 months. Loan takers also need to keep an eye on commercial loan interest rates. They must research amongst the potential lenders to look out for an affordable rate of interest.
People must be transparent without taking any undue risks as false information can lead to a direct rejection. So, it is better to be honest, and upfront with the lenders to make the best of a commercial loan from the available options.
After getting through these filter tests, ensure all the eligibility criteria and gather the required documents. Having all the deliverables ready will fast-track the process of application with quicker approval and disbursal.