Getting a business loan is not a cinch, especially when you have just started and your sales graph has not been consistently growing. Add to that, they also involve a lot of additional formalities like a business credit check and document submission.

Even if you are to borrow a small amount of money, you cannot escape these formalities. You may need a business loan for a variety of reasons. For instance, you may need it to fund your working capital, or you may want to invest in machinery.

However, there are circumstances when you want to borrow money to invest in a profitable opportunity. A lender will check a lot of factors before deciding on your application. They will go over your credit rating and your repaying capacity.

Even if your business has a separate identity, they will check your personal credit rating. Chances are you will be refused to borrow a larger sum of money if your personal credit score is not so good.

Ways to secure a business loan quickly

Here are the ways you can use to secure a business loan quickly:

Have a business plan

If your business is not too old, you will struggle to qualify for a business loan. A lender would want to see your business history. If the loan amount is small, they will expect you to have been running a business for at least one year, but if you are looking to borrow a larger sum to be paid over a number of years, your business must be at least five years old. If your business is not too old and you want to borrow money, you should have a business plan.

A business plan will help your lender know about how profitable your business is going to be. Whether you borrow money to buy equipment or you borrow money to fund your working capital, you will have to ensure that your business will not fail to make money out of it.

A lender wants to get money back, and therefore, they would want to ensure that you do not fail to repay the debt just because your business is doomed to fail.

Your business plan will give all the details about the following:

The purpose of borrowing money

• How you want to utilise the borrowed sum
• What if your investment fails?
• Do you have an alternative repayment plan?
• How do you want to target your customers?
• What marketing methods will you use?

A clear and precise business plan will help a lender make a lending decision.

Arrange a guarantor

A business loan can be expensive. They charge higher interest rates than other personal loans. Your lender will check your credit report to know your past payment record. However, sometimes, despite a good credit rating, you cannot qualify for the most affordable interest rates if your income is not sufficient.

If your lender suspects your affordability, they will either turn you down or they will charge very high interest rates. Some lenders may ask you to arrange a guarantor with a good credit rating. A guarantor will be responsible for making payments on your behalf if you refuse or fail to clear the dues.

Conclusion

Securing a business loan can be challenging, especially for new businesses with inconsistent sales. Lenders evaluate various factors, including your credit score and repayment capacity, before approving your application.

However, having a solid business plan and arranging a guarantor can improve your chances of securing a loan quickly. By demonstrating profitability and financial stability, you can increase your chances of getting the necessary funding to grow your business successfully.

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