Growing a business is rewarding and challenging. The corporate environment is dynamic, and you need funds to flourish your business. Both the budding businessmen and the established entrepreneurs look for funds to reach their goals. It is essential to secure the right amount of funds at the right time.
To solve financing issues, entrepreneurs approach lenders. They always desire a quick disbursal of the loan. However, documents required for a business loan and some other needs can delay the process. To save time, collateral free business loans are the perfect option.
You do not like to get your loan application rejected. Loans enable you to grab lucrative business opportunities. Thus, before applying for the loan, you have to know the factors influencing the decision on approval.
Your credit history
The major factor relevant to any loan application is your healthy credit score. Make sure that your personal credit score should be high. It will help you to apply for the loan confidently. In most cases, financial institutions focus on this score to provide collateral-free business loans.
When your credit score is higher, you will get loans at a lower interest rate. Private lenders and non-banking financial institutions like to assess your loan repayment capacity by checking your credit score. You can speed up the funding process by increasing your credit score. There are loans available for the low credit scores. Still, good credit health is one of the prerequisites to streamline the loan approval process. Invoicing of different purchases, timely payment, and transparent transactions are ways to develop good credit health.
Age of your business
NBFCs and other financial institutes may ask you about the age of your business. Other relevant factors for the business loan approval are the transaction statement and cash flow. Some small business owners find a higher annual percentage rate.
However, NBFCs also like to know the age of borrowers. They may not easily provide the loan when your age is below 25 years and above 65 years. Your age enables them to identify your repayment potential.
Business model
You may have applied for a loan to start a business, or you are a startup with a goal to grow your business. You need to show the lenders how you will achieve it. When they find it impressive, they can make the lending process faster. You have to illustrate your business vision, the purpose of obtaining the loan, and some other factors. It enables lenders to understand your business structure. While submitting the documents required for business loan, you have to provide these details.
Type of your business
Your business type is a noticeable factor to affects the loan approval decision. When the loan provider thinks that it is a risky business, the approval process will be delayed. Financial institutions may charge a higher interest rate. Research your business potentials and try to persuade your lender to rely on your vision.
Income from your business
You may have claimed that you have successfully run your business for a year. You must submit your income proof as one of the documents required for a business loan. On the contrary, when you need the fund for your new business, you have to show your growth strategy. Based on your business status, you have to arrange your documents.
Nowadays, collateral-free business loans are easier to obtain from the lender. Still, you must not overlook these factors to apply for a loan. Try to know the eligibility criteria set by the lender. It will make the business loan approval process easier and smoother. Bajaj Finserv offers unsecured business loans with easy eligibility and minimal documents. This NBFCs also provides pre-approved loan offers to expedite your loan processing.