How to obtain a business loan to meet your needs? Check these hassle-free ways

Business loans could be helpful if you are looking to expand your business or to meet operational expenses. You can avail a business loan to invest in expanding your business or to build a new shop, outlet or office. Even business loans could be handy to repay old debts. Even if your business is well-established, you can apply for these loans to handle unexpected expenses or emergencies.

Entrepreneurs may frequently find themselves grappling with the irregularities associated with their business ventures. That’s where business loans come in handy, helping them to deal with a financial crisis or a liquidity crunch. However, getting a loan without hassle could be tricky. If you’re not familiar with the loan process or if you don’t meet the eligibility requirements, it could be difficult to get approval.  

With the advent of technology, it has become easy to apply for a business loan as most of the lenders follow a complete digital process.  

How to get a business loan easily?

Research Lenders: Look into different lenders offering loans without needing collateral. Compare them based on the features, customer service, interest rates, repayment duration, prepayment charges, and other fees. Choose the one that suits your needs best.

Check Eligibility: Every lender has certain criteria that you must meet to qualify for a loan. Before applying, make sure you match these criteria. Meeting the requirements can speed up the loan approval process. Also, consider aspects like loan interest rates, lender reputation and repayment period, among others, before finalising your choice. Once you've picked a lender, you can visit their official website to apply for the loan.

Understand Credit History: Your credit score reflects your ability to repay loans. If you've borrowed and paid back on time, your score improves. For a business loan, you'd typically need a credit score of 750 or higher. If you operate a sole proprietorship, your personal credit score is taken into consideration for a business loan. In case of partnership firms lenders usually rely on personal credit scores of partners.  Lenders may not require the credit scores of founders or business owners for certain entities.

Gather Necessary Documents: A collateral-free loan requires essential documents such as ID proofs, financial statements of the business unit, details of the assets and liabilities etc. Prepare these documents in advance so you can submit them once you receive initial loan approval. Missing documents could lead to rejection, while having everything ready boosts your chances of approval.

Online Application: Applying online for a collateral-free business loan is convenient. Ensure submitting accurate information while filling out the form, including PAN details, yearly turnover and business nature. Be truthful about any existing debts, as lenders will verify through your credit history. Incorrect details might delay or deny your application, so provide accurate information.

Explain Repayment Plan: For larger loans, you might need to explain how you intend to repay the borrowed amount. Keep in mind that lenders might request collateral for high-value loans. Some banks offer pre-approved small business loans based on eligibility and credit scores.