6 Ways To Improve Your SME Working Capital Loan Approval Chances
Loan firms and borrowers all over the world have a shared mindset – no bad debts. Lenders do want to lend to companies who have a wealth of confidence with sound business and the potential to repay the loan along with timely interest payments.
When you’re talking of applying for an SME working capital loan to your business, the procedure is no longer that complicated, thanks to brokers coming into the picture and making the entire process less time-consuming. Since all the processes are from the lender’s point of view, and it’s not that much you can do as a creditor, there are a few steps you can take to ensure that the loan is not denied.
These are a few tips that you should ensure and keep in check before applying for your loan:
Believe in Your Business and Growth
Many lenders take a loan either to pay back current loans or to proceed with the same amount of inventories and working capital. When you are trying to borrow, one of the key conditions would be to expand a company with borrowed money and not pay off current debts. While filling out the application form for your loan, be positive about your business, know all the information right from the paperwork, and comply with the marketing of the company. You can go a long, long way by being extremely knowledgeable about your business.
Submit an Accurate Application
It seems really simple, but a lot of applications that borrowers submit do not include correct information, or other information is erroneous. The details you include in your application will be used to assess its validity. This must have the names, dates of birth, and home addresses of your business owners and the company registration number. Unless these details are wrong, the application for a loan will be denied, and you will have to reapply again.
This is not a matter of concern if you take a little longer to complete the document, but ensure that all the data you have submitted are reliable and right, answer all the questions you have asked, and double-check the documents. By filling out a correct form, the investor gets a clear understanding of you and your company, which will help him make a smarter decision.
Maintain Correct Accounts and Business Profitability
Lenders do not want to lend capital to a failing company. Maintaining and rising sales and productivity is a sure indication of the company’s thriving business. Lenders who use automatic processes would dismiss a company out of hand because it is not making enough revenues.
It isn’t always possible to illustrate market viability in the early years; but showing healthy signs of operation, income, and ability to repay, helps make the lender grant your loan. When that is not the case, you should also promise collateral against debt to make use of the fund, most generally known as a deposit.
Review Your Credit History
As you know, most of the loans are accepted on the grounds of feasibility, repayment potential, and the CIBIL ratings. Although the individual CIBIL score does not mean that much for a business loan to have the loan accepted sooner and more hassle-free, getting a good credit rating shows promising signs for the lender.
Choose the Right Loan
With so many various types of loan alternatives out there, it is important to pick a loan alternative that fits your wants and needs. It’s not a smart idea to take on a major loan if you’re not able to afford annual interest payments. Until you find the best SME working capital loan option for you, there are a few requirements to bear in mind.
Prepare More than One Payment Plan
Think about the financing you need, the intent, and your time span, and then devise two separate payment plans. Getting a straightforward payment plan and backup would make you seem to be a conscientious creditor and greatly improve your chances of acceptance.