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Important Things Financial Institutions Ask if You Apply for a Business Loan

Securing funds through business loans continues to be the standard choice for businesses. With the advent of online applications, things have become easy “ business loan apply” options online.

But there are several things which everyone have to check before applying for business loan. Because every financial institutions have different requirements. But some of the common things are mentioned below which is surely asked by financial platform.
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Crucial flags Considered by the Lender

  1. Collateral

Financial institutions scrutinise the collateral submitted by applicants to reduce the risk of default. 

  1. Business plan 

Most of the lenders request applicants to submit their business plan with a summary that includes details regarding the team, financials, product and company.

  1. Business financial statements

These audited financial statements should include both personal and business details of any debts in the past, credit card statements, and investment details.

  1. Details on accounts payable and receivable

Lenders would also necessitate reference details along with credit and sale history.

  1. Insurance details

To ensure there is no scope for default, lenders might request for the insurance details

  1. ITR and GST returns (of the past six months or one year.)

Conclusion

After the Startup India campaign in 2015, business funding schemes have been on the rise. Applicants can choose the best plan suited for them using a business EMI calculator. With the right lender and authentic data submission by applicants, availing a business loan is far from complicated.

Must Read: Stages to Get a Business Loan That you Must Know

Common Mistakes to Avoid When Applying for a Business Loan

Business loans are usually sanctioned for starting a new business, for buying machinery and equipment and for business expansion and related activities. A business loan helps to meet the working capital requirements of an entrepreneur or an enterprise which aims to make an additional investment to grow its business.   

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Your business loan application can be denied due to some common mistakes and disqualify you from securing a business loan.

  • First and foremost, you should provide a concrete and detailed business plan to the bank or any other financial institution from which you are seeking a business loan. The lender thoroughly scrutinizes your business plan, and if he is not convinced with your presentation, he is likely to turn down your business loan application. This stands for online business loan applications also.
  • Some lenders require collateral security for a business loan in the form of residential or commercial property, stocks, insurance policies, commercial vehicles, etc. and lack of collateral may result in loan rejection.
  • You need to have a good credit score while applying for a business loan, and if you have defaulted on any loan payments in the past, the banks or private lenders are hesitant to sanction a business loan.
  • Another common mistake that borrowers make while applying for a business loan is not reading the exhaustive loan agreement documents before signing them. One must go through the documents carefully as there are hidden charges and clauses mentioned which should not be ignored.

    Must Read: Things To Remember When Getting A Business Loan