Are you looking for a loan to start or expand your business? A business loan is an indispensable option here that can help you achieve your financial goals. With business loans, you can not only borrow money from the lender but also get a hold of your cash flow that helps to lower the overall risk for the next few years.
Your reasons to avail a business loan can vary as per different situations, but you need to understand that every business loan is not made equal. Some lenders follow a strict documentation process; some need a good CIBIL score while others sanction your loan quickly within a few hours with minimal documentation.
So, before choosing to avail a business loan online, let’s explore 5 important questions you must ask yourself to increase the chance of loan approval from lenders.
5 Questions You Must Ask Before Applying for Business Loan Online
Before you start a business, there are specific points that you need to get checked in order to be legally and generally ready to kick start the journey. There are several documents that you need. But, let’s discuss a few of the most important ones.
Question 1: Is this loan the right option?
When you start borrowing, it’s normal not to know everything about it. But, learning about your options prepares you to choose the right business loan. You have different options available depending on the type of loan you need and the situation. Know all the alternate options too, so that you have a different way if the bank rejects them.
Do not give up if the traditional banks refuse your deal. Explore and compare other options. Make sure you compare the same repayment, loan term, etc., rather than comparing interest rates.
Question 2: What is the track of my cash flow?
Ups and downs are part of business life. In a nutshell, we can say that it’s either profit or loss. It is not always a given for business owners to achieve only positive results. So, it is quite important to keep track of your business performance and cash flow before looking for a loan.
You must have a solid financial projection and accurate repayment plan that adds credibility to your loan application. Having healthy cash flow almost 3 times your EMI would help lenders to prefer your loan request over others.
Here’s your mini-guide to what is CIBIL Score, how to check it online and why do you need it to avail business loan online?
Question 3: Are you sure about the repayment deals?
Now, before you decide to apply for a loan, ask yourself the following questions.
- What is the loan amount that you need?
- Do you think that the loan amount will help you to meet your financial goals?
- And the most important question, do you have enough cash flow to afford the repayments of your loan amount?
Other than the amount you need to repay, don’t forget to think about the loan tenure. Online unsecured ways do give you flexibility, but having a fixed period stated is better. So, it is advisable that before borrowing, get a thorough, honest check done.
Question 4: What are the terms and the structure of the loan?
Every single lender has a different structure regarding fees and repayment plans. Especially when the duration of the loan is less than a year.
What if the lender changes the loan period or changes the interest rates after some time? Lenders may even hit you with extra fees during repayment. Thus, you need to thoroughly check the terms and structure before availing a loan.
Question 5: Do I need collateral?
This scenario is more specific to banks. Banks do not trust businesses when going for loans. Thus, even when you have good financial figures ready, banks often ask for collateral.
Banks are not friends; they are banks, and therefore, you need to provide them with the required documentation before they lend you the loan. Be ready with what they need, or explore the alternate online flexible options available.
When you do something for the first time, you need to be a bit cautious. Even if we ignore the risk involved, we need to acknowledge that your business loans are important for your business’s future.
With time, your business needs keep growing. Consistency helps you thrive. And, a helping hand in the form of an unsecured business loan can make it work.
We hoped you liked this mini-guide on what you need to ask before applying for a business loan online. If you are looking to avail a business loan online, feel free to check out Protium today!
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