Apply for Business Loan!
Lenders evaluate your creditworthiness using your Business Loan application and the documents attached. You must submit a strong application supported by correct and complete documents. Improve the quality of your application by avoiding common mistakes.
Mistakes to avoid when applying for a Business Loan
1. Choosing the wrong lender
Choose your Business Loan lender wisely. Each lender specifies their own Business Loan eligibility criteria and loan terms. You must select a lender who is most likely to offer you a loan. For instance, consider applying to a bank where you have a Current Account or an Overdraft Account. You can use your existing relationship as leverage for getting further credit.
You can get a 24x7 Business Loan from Axis Bank if you are a pre-qualified customer. You can apply for this loan digitally through mobile banking or net banking. The loan amount ranges between ₹50,000 and ₹75 lakh. The tenures are flexible, ranging from 6 to 60 months.
2. Submitting incomplete documents
Lenders use your documents to judge the financial stability, creditworthiness and genuineness of your business. If you omit certain documents or submit the wrong documents, you can make a poor first impression on the lender. Check your documentation thoroughly before submitting it to the lender.
3. Not meeting the eligibility requirements
If you do not meet the eligibility criteria specified by the lender, your Business Loan will certainly be rejected. Lenders specify minimum credit scores, business experience, minimum revenue, etc. to be eligible for a Business Loan. Check the requirements on the lender's website before applying for a Business Loan to ensure that you fulfil them.
4. Applying for Business Loans frequently
If you apply for Business Loans frequently, lenders may conclude that your business is overly reliant on credit. Every loan application you make is mentioned in your credit report, which the lender will check. Frequent loan applications can also damage your credit score, an important criterion for Business Loan eligibility.
5. Applying while having a poor credit score
A poor credit score denotes that do not manage your credit responsibly. Lenders often specify the minimum credit score required for a Business Loan. Check your credit score before applying for a Business Loan and ensure that it meets the minimum requirement. If your credit score is poor, you can improve it by paying your current loans and Credit Card bills on time. Keeping your credit utilisation ratio low and paying off your outstanding debt will help improve it.
6. Applying for a loan you cannot afford
Lenders may reject your application if they believe that you cannot afford the loan. They check the financial statements of your business to judge your repayment ability. Before you apply for a Business Loan, use a Business Loan EMI Calculator to ensure that you can afford to pay the monthly loan instalment.
Also Read: what is small business loan
Conclusion
A rejected loan application can damage your credit score and can prevent you from getting loans from other lenders as well. Make sure you submit a completed loan application, along with all required documents. Refer to the common mistakes to avoid when applying for a Business Loan described above to improve your chances of getting a loan.
Partner with Axis Bank to get your Business Loan application approved hassle-free!
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
