Whether you’re running an established business or starting a fresh company, financial assistance has always been necessary to capitalise on growth opportunities. In fact, with the growing demand for business loans, many NBFCs have entered the lending market, thereby increasing accessibility.
Regardless of how many loan types become available, the key to successfully accessing a business loan has always been and will remain the same. Yes, your application will always stay the most important thing once you decide on which loan to pursue in this process. Wondering how just an application can impact your loan? Let’s find out.
Elements to Strengthen in a Business Loan Application
Securing a loan for businesses in India is a crucial step, especially for entrepreneurs looking to fuel their growth and meet operational requirements. Here are the key elements of the loan application process you must know:
1. Business Plan and Purpose
The foundation of your loan application lies in a well-crafted business plan. You should provide a detailed overview of your products or services, target market, and a solid financial projection. Having clarity about your business goals and how the loan will contribute to your growth will help you administer confidence with the loan providers.
2. Creditworthiness
As you apply for your business loan, lenders will carefully begin to evaluate the potential risks involved in lending to you. They do this by analysing your credit history, which depicts your pattern of taking loans and repaying them.
Therefore, you must sustain a positive credit score to highlight responsible financial management. Also, regularly review your credit report for accuracy, as it significantly influences your eligibility for any loan.
3. Collateral
There are many business loan types where your lenders might ask for collateral to secure the loan. This could be in the form of property, machinery, or any valuable asset. Ensure that your collateral aligns with the loan amount and provides adequate security. Besides, a transparent discussion with your lender about collateral terms can help you tailor your loan application.
4. Business Vintage and Stability (The Track Record)
A proven track record always offers a plus point for existing businesses to borrow a business loan swiftly. The longer your business has been operational, the more it speaks to your ability to weather economic fluctuations. You can highlight your business’s key milestones, consistent revenue streams, and any industry recognition your business has garnered.
5. Legal Documentation
Your business’s documentation is one of the most important elements of the loan application. Very thoroughly, ensure that your business has all the necessary legal documents, such as business registration, GST number, PAN card, or other required licences. As a result, it will help demonstrate your commitment to compliance, and it may also expedite the business loan approval process.
6. Financial Statements
It’s imperative to provide accurate and current financial statements as they would help strengthen your loan application. These statements serve as an essential element to showcase your business’s financial well-being. You must present your business’s revenue, expenses, and profits transparently, underscoring its capacity to meet loan repayments.
7. Loan Amount and Repayment Terms
When considering a business loan, precision in determining the required amount and defining the ideal repayment terms is crucial. Make sure your expectations match the actual position of your business’s cash flow. Based on that, you should choose a repayment schedule that aligns smoothly with your revenue cycles.
Why Choose NBFCs for Business Loans?
Here are a few reasons why NBFCs should be at the top of your list when it comes to pursuing a loan for your business:
1. Hassle-Free Loan Processing
NBFCs are known for their agility and efficient loan processing. When you choose an NBFC as your lender, you can expect quicker turnaround times compared to traditional banks. Their hassle-free documentation processes and streamlined evaluation criteria can enable you to access the funds you need promptly.
2. Accessibility to All
Whether you are a small-scale entrepreneur or operating a mid-sized enterprise or large-scale business, NBFCs cater to a wide range of businesses. The accessibility they offer ensures that your unique business loan needs are addressed comprehensively, promoting an environment for sustainable business growth.
3. Focus on Relationship Building
Building strong relationships with clients is one of the major reasons why NBFCs are preferred as business loan partners. As an entrepreneur, you can benefit from a more personalised and collaborative approach when working with an NBFC. The emphasis on relationship building means that you are a valued partner.
4. Technology-Driven Innovation
NBFCs in India have embraced technology to enhance their services. From online application processes to digital documentation, NBFCs leverage technology to make the lending experience more convenient for you. The smart use of advanced analytics and data-driven insights also allows NBFCs to assess risk more accurately to provide tailored solutions and competitive interest rates.
Is Your Business Loan Application Strengthened?
Now that you have explored elements of a loan application for your business, strengthening them won’t be challenging anymore. However, collaborating with the right lender would always be unless it is an NBFC like Tata Capital. They are one of the most reputed ones in the lending industry when it comes to business loans.
Tata Capital’s hassle-free 5-step loan application process is so easy that it has a proven record of assisting business owners in need seamlessly. What makes their offerings even better is they have flexible terms. Moreover, you can choose a loan from a diverse range of options and many more.
As you make your way onto the exciting path of business success, consider Tata Capital as your trusted ally to achieve greater milestones.
