Business loan plays a very important role while considering the cash flow. The business loan also helps in meeting the working capital requirements of the business owner and its respective enterprise. Notwithstanding the size of your business, chances are that at some point of your business tenure you might need funds for your business expansion or business-related activities.
An MSME loan is not a kind of financial product that is taken very frequently by the business owners. Since it is an important financial decision that one has to make, it is also important that one should avoid common mistakes while looking for a fund for yourr business.
No one likes to receive business finance in India denial letter from the lending institution due to common mistakes, or due to lack of information or ignorance. In fact, many people never even try to apply for a business loan after getting rejected by a lending institution. However, rejection doesn’t mean that you can’t get a loan to run your business.
Therefore, let’s take a look at mistakes to avoid while opting for a business fund.
Top Mistakes to Avoid When Looking for A Business Loan
Your CIBIL score is an important factor that can possibly affect your eligibility for a business loan. Many times, it is also possible that some error might have occurred while generating your CIBIL report. Therefore, before you apply for an SME loan, it is crucial to first check free CIBIL score and it should be one of the foremost checkpoints in your checklist, to avoid any disputes regarding any errors that can take place while applying for a loan.
Previous year’s bank statement (current account and savings account) must have a fair and a healthy balance that is debts free, on account of balance and non-maintenance charges. Also, one needs to make sure that there aren’t any occurrence of cheque or EMI bounce.
Your lending institution will for sure assess your MSME loan eligibility based on the financial documents that you submit. Hence, you must keep all the documents handy as stated by the leading NBFC like ZipLoan or in that case any lending institution. Also if possible, scan the documents beforehand and keep the PDFs on your Email with easy and ready access.
You must apply for business funding only as much as the amount that you require. The money that you are going to borrow also carries an interest cost, so you must borrow only as much as the amount which is required for your business. Always ensure that your eligibility is higher than the amount you have looking to borrow.
Knowledge of Loan Products
There is various lending institution in the market that are offering different loan products. So, it is essential and recommended to conduct thorough research of the varied business fund offers and then select the one which exactly meets your business requirements in the best possible way. This will enhance the chances of your loan application being approved in the first go itself.
Now you have seen the blunders that people make when applying for an MSME loan from NBFCs or banks. If you get everything ready before applying for a loan, there will be a high chance to get approval fast.
Frequently Asked Questions
How can I get a business loan?
To avail small business finance, one can visit our Ziploan’s website and fill the loan application form online and apply for an online business fund. Or he can also apply for a loan through the mobile app.
Who can get a business loan?
Any business owner with the business vintage of more than 2 years can avail an SME loan from us.
What documents will I require to get a business loan?
The following documents are required to apply for a business loan are:
PAN, Bank statement (previous 9 months), ITR of previous 2 years, House and business place address proof.
What is the maximum loan can I get for my business?
The maximum loan amount that is offered by Ziploan Rs. 7.5 lakhs.