Things To Keep In Mind While Availing A Small Business Loan
Small Business Loan might look like an easy deal, but it is not. Similar to other loans, it is important that you prepare well in advance for small-business loans. Make a to-do-list and have a clear-cut plan as to why you want to borrow a Small Business Loan. However, even before you prepare and do the background research, the first thing you need to do is to check whether you qualify for an SME loan or not. Regardless of the financial institution, you are approaching; there is a specific eligibility criterion set by the lenders which you have to meet.
When it comes to eligibility criteria, Non-Banking Financial Companies are more flexible as compared to most of the banks. Highly rated NBFCs such as Bajaj Finserv have become a go-to-option for entrepreneurs who are seeking an SME loan. As said earlier, each institution has their pre-requisites that need to be met. In this case, we will look into one of the most flexible Small Business loan criteria as set by Bajaj Finserv and understand how to qualify for an SME loan.
Three primary aspects are considered as per the customer type. A customer can either be:
- Self Employed Professional â€“ Doctors, CAs, Architects and so on.
- Self Employed Non-Professional â€“ Traders, retailers, proprietors and so on.
- Entities â€“ Partnership firms, Private Limited and so on.
The requirement for these categories differ. However, the documents required are the same.
- Passport size photograph
- KYC documents
- Bank account statement of the previous month(s)
- Relevant Financial documents
- Business proof: Certificate of business existence
The primary question lingering in your mind would be, but what do I need apart from these documents?
Well. It is time to discuss that.
- Build personal & business credit: A credit score matters a lot. It is not just the business credit that you have to keep in mind but a personal one as well. A poor personal credit score can hinder the chances of getting a Small Business Loan. For you to avail an SME loan, you should have a credit score of 750 and above. In case if you have a slightly lower credit score, Bajaj Finserv will still consider your case.
- Credit History: While providing you with an SME loan, the lender will check your credit history. Every lender does so while providing any loan. It is important as a borrower that you do not have any default and outstanding credit payments to your name. It hinders the chances for your loan application to get accepted.
- Prepare the documents: If you want to simplify the process of loan borrowing, it is essential that you get the documents ready and arranged. It is the unarranged documents that cause the most trouble in the end. Make sure you have every document in the right place.
- Get your plan ready: Financial institutions when providing you with the SME loan want to know about your business plan. They just want to see how confident you are in what you want to achieve. For that reason, it is essential that you have an entire plan. Even if they do not bother to ask you about it, you must keep the matters clear and transparent with your lender.
- Prepare to keep a Collateral: Really? Do I have to keep a collateral? Well if you are approaching a bank or some other lender, they will ask you for collateral against the Small Business loan. However, if you approach Bajaj Finserv, you might not have to do so. And that is because they are quite flexible in their operation.
Above mentioned points are helpful while you are going to apply for Small Business Loan. There are a lot of top ranking NBFCs that can provide you a small business loan and one of them is Bajaj Finserv.