28 Nov 2016, 10:15 — 3 min read
For an entrepreneur, business funding is not a one-time need. From establishing an enterprise to seeing it grow bigger and better, you will need business funding multiple times. A practical solution to arranging capital is to apply for a business loan instead of using up all the savings.
Plan and get the right business loan when you need one, here’s how!
1. Decide the amount and purpose
To begin with, lay out a business plan. This way, you will be sure of your exact financial shortfall and the amount needed to fill the gap. Even the lenders look for this clarity. Also, borrowing more than you need or less than the required amount will not do your business much good. Moreover, by doing this, you can plan other expenses as well and save yourself from an expensive loan deal.
A huge number of loan applications are rejected every year because of incorrectly filled forms or incomplete supporting documents. Check with your lender about the documents they need to process your application and collate them in one place, preferably digitally, so that they are easy to retrieve.
3. Get an expert's advice
Understanding the loan process in and out is always helpful. If you are new to this, you might not understand some funding terms. Seek expert help, if your lender can help on this, go ahead.
Things such as APR, pre-payment penalties, etc. can make a big difference to your loan cost. Consulting an expert who can help you with the loan terms is always good.
4. Compare different funding sources
Have you looked beyond your bank for a business loan? Apart from banks and NBFCs, you can also look up to Fintech lending platforms for a business loan. Fintech lending is gaining popularity owing to a wider choice of lending options, speed, safety and transparency. Moreover, applicants can compare loan deals of various lenders on a single platform and make their decision.
5. Ask the right questions to your lender
Finally, before you sign on the dotted line, here are some questions to ask your lender:
• Are there any early repayment charges on the business loan?
• Can the loan be transferred or refinanced?
• What are the specific terms of the loan?
• What is the entire cost of my loan?
• What if I need more finance?
• What happens in case of a default?
These were some important things to take care of when applying for a business loan. Business finance can help your venture sustain and grow. However, taking a loan on poor terms can have long-term repercussions on your business.
It is best to do some research and go ahead. Get the right financing at the right time, and nothing can delay your success as a dedicated business owner.
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views, official policy or position of GlobalLinker
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