If you’re an entrepreneur applying for a business loan, how much information would you share with your lender? We recommend you be transparent with the lender and share the most accurate information on your business loan application. This will help the lender make a lending decision faster and increase their trust in you. Why? Let’s find out.
1. All lenders verify your information
Lenders have many ways to verify the personal and financial information you provide on your business loan application. This is not just limited to information included in your credit report, but also information about you and your business available online and in your background check. They also have tools to analyse financial patterns in the bank statements you have submitted with your business loan application.
In addition to these sources of information, lenders may also conduct a site visit before they lend to you. If the information they discover during their visit does not match your information on paper, this will negatively impact your chances of getting a business loan from them.
2. Withholding information can negatively impact your future creditworthiness
As credit specialists who have helped thousands of SMEs get business loans, this is a common mistake we encounter. If you aren’t completely transparent on your loan application or during your meeting with the lender, they will find out when they verify your information. Transparency with your lender builds their trust in you and increases your chances of getting approved for the business loan. Here’s an example:
Imagine you own a house that is under construction right now. You’re applying for a business loan, and you decide to use this house as collateral for the loan. In this situation, will you tell the lender you own the house, but it’s under construction, or do you just let them believe it’s a fully constructed property?
Our advice – share all this information with them and let the lender determine if you qualify for the business loan you’re requesting given your current circumstances. Honesty is the best policy and sharing too much information with your lender is never a bad thing.
These small details impact the loan amount and ROI the lender can offer you because the valuation for a completed residential property is different from one still under construction. And not sharing all the information with them may cause doubts about the trustworthiness of your business.
If the lender has already processed your application and is in the final stage of verifying your information and then discover you weren’t transparent with them, this could also negatively impact your credit score. When lenders do a background check on you, they also do a hard pull of your credit report. A hard pull gets recorded on your credit report. If the lender rejects you after they did a hard pull of your credit report, it may cause another lender to think your business isn’t in a good place, making it trickier for you to get a business loan from another lender at preferential terms.
So, with all the change happening right now, what do you do when you apply for a business loan?
Honesty truly is the best policy. Avoid statements you cannot back up with data or proof and have thorough knowledge about your business plan, operations, and processes.
If you run your business responsibly, have an Experian credit score of 700 and above, have all your KYC and business documents in order and have healthy financials, you are more than likely to get approved for the loan you want. Be transparent on your business loan application and in your interactions with the lender (and their representatives), and get the funding needed to grow your business.
When you apply for a business loan with CreditEnable, we first check your loan eligibility. This check includes a soft pull of your Experian credit score to ensure you meet the credit policies of our lender partners. A soft pull is different from a hard pull and is not recorded on your credit report. This is a great way to judge whether your business qualifies for a business loan before directly applying with a lender and getting rejected, which will negatively impact your credit score.
Check your business loan eligibility with CreditEnable today, and if you still have questions about what information you should put on the application, give us a call on +91 84509 67207, and we will be happy to assist you!
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