Whether it is starting a new business or expanding an existing one, the business loan process can easily be navigated by following these steps. When running a business, there are multiple expenses such as working capital requirements, salary payments or purchasing inventory.
For these various expenses, you may require more than what is available in your savings. In such situations, business owners have the option of applying for a small business loan to get access to the finances they need.
Learn more about Shriram Finance business loans and apply now for a small business loan.
How to Get a Small Business Loan
There are various types of business loans offered by Shriram Finance, including startup loans, working capital loans, term loans, shop loans and more. The various needs of your business can be financed either by:
- Secured Loans: These loans require collateral, such as property or equipment, which serves as a guarantee for your loan. This type of loan may be easier to qualify.
- Unsecured Loans: These loans do not require collateral, but may have higher interest rates.
The following 8 steps will help you prepare for the business loan process:
1. Determine Your Funding Requirements
Before you begin the business loan process, it is important to assess a few factors. This includes determining how much money is required. Analyse your business goals and projections and be reasonable about your funding requirements.
There can be many reasons for funding, such as managing operations, upgrading, maintaining and repairing software and hardware, scaling infrastructure, acquiring staff members and diversifying or launching new products and services.
This will help you determine the type of business loan and the loan amount that is right for your business. Knowing your business's specific needs will make it easier to prepare a loan package.
2. Keep Your Credit Score in Check
When you apply for a loan, lenders often rely on your credit score to determine your creditworthiness. Therefore, it is crucial to check your credit score before beginning the loan application process and make necessary improvements if required. These steps may involve paying off outstanding debts, rectifying inaccuracies on your credit report, or ensuring that you do not overextend your business line of credit.
3. Research Different Lenders
It is important to find the right lender for your business. Ask important questions regarding the interest rate, flexibility in the loan duration, repayment terms, any additional charges or fees, the application process, the lender's terms and any possible lender involvement in your business operations after sanctioning the loan.
It is also a good idea to read reviews from other borrowers. Since many lenders offer small business loans, it is important to find the right one. Shriram Finance offers various business loans and assistance to help you select the right one.
4. Check Your Eligibility
While you learn how to prepare a loan package, make sure that your business meets the eligibility requirements of the lender. These requirements can be based on the type of business, how long the business has been in operation, your age and other factors.
To simplify the process of applying for a small business loan, it's important to first review the eligibility criteria of potential lenders and narrow down the options to those whose basic requirements you meet. This approach will help streamline the process and make it easier to proceed with your loan application.
5. Apply for the Right Business Loan
Different types of business loans are available for the exact and specific needs of businesses. Depending on the type of business you own and manage, there are business loans that are tailor-made to suit your specific financial requirements. This may include a Business Loan for Women, Working Capital Loan, GST Business Loan, SME loans and other loans that are offered by Shriram Finance.
6. Prepare Your Business Plan
A strong business plan is a crucial component of the business loan process. The business plan should include information about the industry, market, competition and financial projections. It should also outline the use of the loan amount and the repayment plan. Make sure the business plan is thorough and accurate and that it clearly outlines how you plan to use the funds. This will show the lender that you have a solid plan for growing your business and repaying the loan. A well-crafted and clear business plan can give your application more credibility.
7. Prepare Your Financial Documents
Before you apply for a small business loan, make sure you prepare all the required documentation. This includes financial statements such as your balance sheet, cash flow statement, tax returns, bank statements and more.
Lenders will require a variety of financial documents as part of the business loan process. Being well-prepared with all the required documents will create a positive impression on your business and you as a business owner. Prepare these documents in advance to make the application process easier.
8. Find the Best Interest Rate
One of the most important aspects of the business loan process is the interest rate. When you apply for a small business loan, negotiate for the lowest interest rates, longer repayment periods and lowest fees or charges.
Lower interest rates and longer repayment periods help businesses avoid straining their finances. Shriram Finance's business loans have attractive interest rates starting from 15%* p.a. and flexible repayment tenures from 12 to 60 months.
Use the Shriram Finance business loan calculator to get quick and accurate results on your EMIs.
Summary
There are multiple factors to consider when you are researching how to get a small business loan. Following these key steps can increase your chances of getting a business loan and using the funds to start or grow your business.
Remember to be prepared and transparent throughout the process and ask for assistance if required. Once your business loan has been approved and disbursed, make sure you carefully repay your EMIs on time to build your credit score and maintain a good working relationship with your lender.
Shriram Finance has assisted businesses for the past 45 years in raising funds and offering one of the most attractive rates in the market. Apply now for a business loan!
Key Highlights
- It is important to carefully assess the precise financial needs of your business before you apply for a business loan.
- In addition to finding the right lender, make sure that you and your business meet the eligibility requirements of the lender.
- Depending on the type of business you own and manage, there are business loans that are tailor-made to suit your specific financial requirements.
- Prepare all your financial documents including a detailed business plan, which is a crucial component of the business loan process.
- When you apply for a small business loan, negotiate for the lowest interest rates, longer repayment periods and lowest fees or charges.
