6 Tips To Increase Your Chances Of Getting A Pre-Approved Business Loan
Take your business to the next level with a pre-approved loan. Follow these 6 tips to increase your chances of approval and secure the funding you need to grow.
Getting a business loan can be a game-changer for entrepreneurs and business owners seeking funding for their ventures. And if it is pre-approved, it’s icing on the cake as it has several advantages—faster processing, better interest rates, and increased negotiation power. Besides, certain charges, such as the processing fee, are also waived and you get flexible payment options. The process of getting business loan in this case also requires minimal paperwork. However, obtaining it can be challenging, as lenders assess various factors before extending their offers. But these 6 tips can significantly enhance your chances of bagging a pre-approved business loan.
Maintain A Strong Credit ScoreOne of the first things lenders check is your CIBIL or credit score, which reflects your creditworthiness and financial stability, indicating how likely you are to repay the loan. A score above 685 is generally considered favorable for obtaining a pre-approved loan and making it more affordable. To maintain a high credit score, ensure timely payment of existing debts, keep credit utilization under 30% of your credit limit, avoid applying for multiple loans simultaneously, and avoid defaults.
Showcase A Strong Financial HistoryLenders rely on your financial history to assess your ability to handle debt responsibly. Provide a clear and comprehensive financial history of your business, including past and current financial statements, tax returns, and audited reports. Demonstrating consistent revenue growth and healthy cash flow will strengthen your case for a pre-approved business loan.
Keep Updated Financial RecordsMaintaining updated financial records is crucial for your loan approval process. Ensure that all financial or bank statements and other documents are up-to-date and readily available for scrutiny by lenders. Timely access to updated records shows your commitment to transparency and responsibility, which will boost your credibility as a borrower.
Sapna aapka. Business Loan Humara.Apply Now
Choose The Right LenderSelecting the right lender can significantly impact your chances of obtaining a pre-approved business loan. Different lenders have varying eligibility criteria and loan products. Research and compare the offerings of various financial institutions, including banks, non-banking financial companies (NBFCs), and online lenders. Choose a lender whose loan products align with your business needs and whose terms are favorable to you.
Maintain A Healthy Debt-To-Income (DTI) RatioThe debt-to-income ratio is a crucial metric that the financial institution will use to evaluate your ability to repay the loan. It measures your total monthly debt obligations in relation to your monthly income. To increase your chances of obtaining a pre-approved business loan, keep your DTI ratio below 40%. Paying off or consolidating existing debts can help lower your DTI ratio and improve your eligibility.
Provide Collateral or A Guarantor
If your business is relatively new or your credit history needs to be stronger, offering collateral or a guarantor can enhance your chances of securing a pre-approved business loan. Collateral provides lenders with an added layer of security, reducing their risk, while a guarantor provides a backup in case of loan default. Both collateral and a guarantor offer assurance to lenders, making them more willing to extend pre-approved loan offers, whether for a big organization or a small business loan.
Obtaining a pre-approved business loan requires careful preparation and financial planning. Ensuring you have a good relationship with the lender will go a long way in securing a loan. So, if the institution you have a bank account or a credit card provides a competitive loan, do consider it. Assess your business’s financial needs and align them with the loan product that best suits your requirements. You can secure a pre-approved business loan that will help fuel the growth and success of your business venture.
Sapna aapka. Business Loan Humara.Apply Now
Disclaimer: The information contained in this post is for general information purposes only. IIFL Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. Given the changing nature of laws, rules and regulations, there may be delays, omissions or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Gold/ Personal/ Business) loan product specifications and information that maybe stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Gold/ Personal/ Business) loan.