How do I improve my chances for a loan renewal?

If you want to maximise your chances of renewing your small business loan, you must seek to maintain a positive repayment record and not allow your business financials to fall behind.

Lenders will want to see that you established and maintained your monthly EMI repayment schedules. They also want to see good cash flow from your business and some stability in your income statement and balance sheet.

The best practice will be to keep your financial statements, tax returns, and bank statements easily accessible when you are going to apply for renewal.

If your business has grown or well-diversified, show the lender updated business plans and projections to ensure they have accurate impressions of your business prospects.

Communicating early and often with your lender is very helpful, especially if your business is changing in ways you cannot gauge, or that which are not financially measurable.

Be sure to provide supporting documentation that confirms your business changes.

If your loan is secured, communicate consistently with your lender regarding collateral. Inform your lender that the collateral remains in good standing and is adequately insured.

It is advisable to request a renewal well in advance of the expiration of the current loan as this will give both you and the lender opportunity to properly review and process the renewal application.

If you are self employed or have other types of business setup other than a personal name then it is recommended that you ensure your last GST returns filed and Udyam/MSME registration is current as this will show compliance and fiscal discipline. Also, typically a credit score above 700 shows you are reliable and good for repayment.