The reason behind the failure of 29% of small businesses is a capital shortage. Even though the trend of startups is at a hype, still some people are omitted from its reach due to the credit crunch. A lot of people in the country belonging to the middle and lower middle class are only left dreaming about their business. The reason being lack of sources to generate credit or they just simply lack the knowledge required to avail the already existing sources. In this article we will brief you about the top 5 small business loan requirements that a business owner must know.
Before having an insight into the top 5 small business loan requirements, we must know what a small business loan is.
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SMALL BUSINESS LOANS: AN OVERVIEW
Compared to the other funding option, to cover the company expenses and costs at short and immediate notice, small business loans come in handy. It is a simple and easy way to cover the immediate costs that a company needs to fulfil like office space, materials, equipment, marketing etc. Most lenders offer a business loan of up to 75 lakhs with a repayment date of 60 months, especially for the purpose of business expansion.
Top 5 Small Business Loan Requirements
The loan requirements for businesses are different from personal loan requirements and so we must keep in mind the different requirements and eligibility. So here’s a checklist of top 5 small business loan requirements that must be taken care of.
1. A Well Researched Business Plan
To have a good loan amount at the end of the day with the least possible EMI, your only task will be to make the lender believe in you and your business. So a solid business plan with all the necessary information will be the last nail in the coffin to lock the deal. Now what a good business plan is, you may ask. A good business plan has a lot of numbers doing the job. Data presented in an orderly fashion with all the key points covered makes a good business plan. So before applying for a small business loan, keep your business plan ready.
2. Keep a check of your credit score
In order to get a good loan deal, it becomes important to keep in mind that the lender will also require a credibility check on you. So it is important to maintain a decent credit score to get a good business loan.
3. Keep The Financial Reports Handy
Instilling the lender’s trust in the company and showing that the company has produced some significant outputs in the past years is another one of the top 5 small business loan requirements. The lender should have faith in your company by looking at the projections of your revenue and profit reports. This will depict professionalism and reliability of your company.
4. Keep Your Basics Clear
When applying for a small business loan, you must know what type and amount of loan you are eligible for. Also ensure that all the documentation required (ITR, Profit-Loss Projections, Financial Statements, Identity details etc.) for the loan process is ready at hand to avoid the last minute hassle. The list of top 5 small business loan requirements is incomplete without the documentation and clarity about the process.
5. Figure Out EMI Beforehand
Last in the list of top 5 small business loan requirements is a calculation of EMI. Before applying for a small business loan, it is advised to have a rough calculation of the EMI that you will have to bear. It will help you manage and plan your finances. You can use some online EMI calculators provided by different banks to have precise data.
These top 5 small business loan requirements are supposed to be taken care of when applying for a loan. So that you don’t miss any important piece of information, we have compiled a list for your convenience. Now you can apply for a business loan without a hassle.Don’t lose hope if numbers don’t justify your business ability, there are a lot of other ways for the lender to develop trust in you including collateral, personal guarantee etc.