How to get business loan easily?

Securing a business loan generally includes much time and effort, especially for small and medium-sized enterprises. But you can save time and effort by producing a perfect business loan application. This systematic approach can increase the chances of your success. This guide teaches you all the tips and tricks for question in mind that How to get business loan easily? Securing a business loan is essential to fuel operational expansion and manages your daily expenditures. Business loan also help you procure necessary equipment or inventory.

This process may be challenging if you are navigating the terrain of business loan applications for the first time. It might be difficult for you to determine the starting point and the necessary documentation.

In this article, we are explaining processes and easiest ways to get business loan like concrete business plan, loan purpose, basic requirements & documents, financial report (CMA data), financial data including ratios & profitability analysis, required loan amount, CIBIL score, suitable lenders, strategic planning and wait for result etc. and the loan amount will helpful to you for running of business smoothly as well as its grow day to day.

1. Have a Concrete Plan

Before you start your loan application process and understand How to get business loan easily? you must have a comprehensive business plan.  Must draft a strong business profile if you are a startup or a small business. You need to establish a positive relationship with your bank; this can prove advantageous. Furthermore, you must ensure that all your income documents, like income tax returns, balance sheets, and profit and loss statements, are constantly updated.

2. Clarity on Your Loan Purpose

You need to understand the specific reason for requiring a business loan. Whether it is for equipment purchase expansion, long-term growth funding, or other needs, you need clarity on your loan’s purpose. This will improve your chances of loan approval and ensure the appropriate utilization of funds.

3. Basic requirements & documents

Lenders first ask or would like to know about all basic documents and information of your business. All these are initially required to process a loan same as mentioned below:

1. KYC documents of applicants.
2. About good CIBIL score which would be 685 or above.
3. Business proof – business vintage of at least 3 years.
4. All Bank statements of last 3 years.
5. Income Tax returns of personal as well as business of 3 years.

4. Financial report (CMA data)

Credit monitoring arrangement (CMA) is essential to indentify the financial position of a business. This CMA data always helpful to the lenders, they ask about it to analysis of your business before landing. Here you should have a good chartered accountants (CA) who can prepare CMA data for you business. Kcorptax have experienced CA’s which have already prepared many CMA data’s for different types of Industries.   

5. Financial data including ratios & profitability analysis

Lender asks you financial data with ratio analysis, which will helpful to them to determine business worth, liquidity operational efficiency, profitability and solvency ratio. With perfect ratio analysis always help to compare data with similar industries financial and mark that how company will perform in over the time in future.Here you should have essential requirements your CA’s, who have copies of online ITR filing for last 3 years of your business.

6. Determine Your Loan Amount

You need to calculate the required loan amount perfectly. The right assessment helps you avoid financial surplus or shortage issues later on. You need to have a well-thought-out budget to provide some clarity on the cash flow. This will help you address the lenders’ queries regarding fund utilization and improve your chances of loan approval.

7. A Business Credit Score (CIBIL) is Essential

You need to know that your business credit score (CIBIL)  is significant for the lenders, for a good credit score can reflect your business’s reliability and repayment capability. This will help you earn the trust of potential lenders. CIBIL score should be above 685 but you need to maintain a credit score above 750, which is good score. Additionally, you are more likely to acquire loan if your business is established for more than two years at least.

8. Identifying the Suitable Lenders

You need to conduct thorough research on different business loan providers in India. Must carefully scrutinize the eligibility criteria, loan terms, conditions, and benefits other lenders offer. You can explore online business loan marketplaces. This can help you compare multiple options and select the right loan offering.

9. Strategically Planning Loan Applications

The business loan application is essential for securing the desired loan amount. So, meticulous preparation for your application is necessary. You must include the business owner’s profile, business plan, basic financial statements, and personal information. You must organize the documents systematically for easy reference for the lenders.

10. Time and Patience Can Yield Excellent Results

After submission, it takes around two to four weeks for lenders to process the loan. It would help if you communicated with the lender regularly for updates on the application status. You should also ensure the instant provision of any additional documents if required.

Things to Consider When Evaluating Different Options to Identify to get business loan easily?

• The loan’s annual percentage rate includes the yearly total cost and consists of the rate and the fees you need to compare the APRs among different loan. This offers a clear perspective on affordability and lets you directly compare the cost.
• The lenders generally impose initial fees for processing your loan applications. You need to incorporate these fees in your assessment. This will help you understand the total cost of the loan, and this will help you make an informed cost comparison.
• You must know that the business loan terms can vary widely; they can be anything from one year to as long as 25 years. When you go for a long term, you can reduce monthly payments, but it can escalate the overall interest you need to pay. The choice of your loan term can help you align with your business objectives and your capacity to manage regular installment payments.

Conclusion

Several avenues in India help you obtain business loan. However, multiple loan applications can potentially harm your business’s credit score. Therefore, a strategic loan application can help you improve the likelihood of successful business loan acquisition.

Are you looking about how to get business loan easily? Then here an expert can help you. The professionals at KcorpTax have worked as key stakeholders in fund planning, due diligence, tax, and advisory engagements. They have helped companies across different industries such as heavy engineering, IT, banks, FMCG, manufacturing, packaging etc.

Also Read- The Crucial Role of CA’s in Business Success