It’s 2022. This year, your business is going to shine, and CreditEnable is here to help you get the business financing you need to do just that!
As credit experts, we’ve helped thousands of SMEs assess their loan eligibility, improve their creditworthiness, and successfully get the business financing they need to achieve their growth goals! Now we’re sharing CreditEnable’s top tips on how you can get your small business financing quick by taking just a few measures of preparedness.
1. Prepare your loan documents before applying for the business financing
The supporting documents you need to submit with your business financing application vary depending on multiple factors. These include your business constitution, the type of loan you’re applying for, what loan amount you need, and which lender you’re applying with.
To speed up the loan process, we recommend having your documents ready before applying for a business loan. The basic documents you’ll to submit, no matter what business loan you’re applying for, are:
- Individual KYC documents – Aadhaar and PAN)
- Business KYC documents – Company PAN, proof of business and business address
- Bank account statements – For all your business bank accounts, for the last 12 months
In addition to this, some lenders may also ask for your audited financials, ITRs, and other tax documentation. When you apply for a business loan using CreditEnable’s technology platform, we tell you upfront what documents you’ll need to share with the lender. Since our process is 100% digital, you’ll need electronic copies of the documents (digital versions, PDFs, scans, or photos).
While we do not give you the loan, we do check your eligibility for a business loan, prepare your entire package, including your documents, and submit your complete application to the lender partner we matched you with to ensure you successfully get the business financing in record time.
2. Know your credit score and eligibility for a business loan beforehand
One action that negatively impacts your business is applying for a loan that you are not eligible for. Lending to an SME involves risk for the lender, so they have strict eligibility criteria that guide their lending decisions.
When you apply for a business loan that you are not eligible for and apply directly with the lender, it can negatively impact your credit score and future loan prospects. That is why we recommend checking your credit report and credit score before you apply for business financing.
At CreditEnable, we offer our SME customers a free eligibility check, which includes a soft pull of their Experian credit score, to check their eligibility for a business loan. Once we know your credit score, we can determine whether you meet our lender partners eligibility criteria. Our lender partners prefer to lend to SMEs with a credit score of 750 and above.
If you don’t meet their eligibility right now, we tell you the exact reason why so that you can take action to correct this and become eligible in the future. If you are eligible, we push your business financing application further, ask you to submit your supporting loan documents, and match you with the lender partner who is most likely to lend to you! This way, you protect your credit score and get the business financing you need fast!
3. Maintain a stable bank balance and have regular cash flows in your business bank accounts
When you apply for business financing, you need to share your bank account statements with the lenders. This helps them assess your business financials and ensure your business is doing ok and is not in a cash crunch.
So, maintaining a stable bank account balance and having healthy cash flows lets them know your business is strong and that you will be able to make your monthly EMI obligations on time.
What your average bank account balance should be is determined by your banker. When you open a Current Account, there is a set minimum account balance you need to have. Maintaining this balance helps you avoid penalties and lets lenders know you have the financial ability to be a responsible borrower if they lend to you.
If most of your business transactions happen in cash, remember to routinely deposit that money to your business bank account to record your cash inflows. Depositing your cash income is also good practice for tax purposes, so the government can accurately assess your tax dues.
4. Calculate your interest rate red line before you apply for the business loan
Once you’ve submitted your loan application and the lender completes their credit assessment of your business, they will communicate certain loan terms (including the amount, interest rate, and loan tenor) they can offer you.
In our time helping SMEs get their business financing, we’ve noticed many of our customers spending a lot of time negotiating these terms, especially the interest rate. So, before applying for a loan, have a clear idea about a few things:
- What loan amount do you need right now.
- What your current profit margins are, and how will accepting business financing impact them.
- What will you use this business financing for.
Once you have these answers, you’ll be able to calculate what business loan interest rate your business can afford, and you can go into the loan negotiations with a solid understanding of your needs.
To significantly reduce the time it takes to get business financing and to improve your chances of getting the loan:
- Have a clear understanding of your financial needs, credit score, and interest rate expectation.
- Ensure all your supporting loan documents are valid and ready before applying for the loan.
CreditEnable has helped eligible SMEs get business financing at favourable loan terms in just 2-3 days. For any other SME financing related questions, we’re here to help.
Start your application today or give us a call at +91 84509 67207.
Business Loans. Enabled Simply.