Business loans can greatly support a startup as well as an existing business to grow. Business loan funds can be used to invest in machinery or equipment, hire new staff members or other numerous expenses. To secure such beneficial loans, you should avoid the following roadblocks:

• Poor credit history: Creditworthiness is the primary factor a lender considers before offering a small business financing option. Lenders consider an applicant’s credit score to determine their credibility. If there is a lack of diligence in repaying previous debts, the lender may reject the loan application.
• Lack of a solid business plan: Lenders can easily sanction a loan for a well-thought-out plan for your business. A business loan application with a half-baked plan may be rejected.
• Many loan applications at a time: Individuals should not make many loan applications at once. They should shortlist a few lenders for a SME loan (full form – Small and Medium Enterprise) and pick an offer with the maximum probability of approval. Applying for many loans at a time can be a red flag for credit bureaus.

Avoid any of these activities that can prevent lenders from accepting your small business loan applications.

Self-employed persons, proprietors, partnership firms and private ltd corporations serving in manufacturing, trading or services sectors can apply for these loans. Existing companies need to show their financial statements showing a profit for the past two years. 

If you need a business loan of Rs.50 lakhs, you can get it without collateral against a small business loan. If your requirement is for more funds than Rs.50 lakhs, you can apply for a secured business loan with renowned NBFCs at a lower interest comparatively. 

Must Read: Here’s how SME Loan Benefit Your Business?