All That You Wanted To Know About Business Loans!

Business loans are generally sought by:

  • The existing, well established business organizations
  • The organizations who are starting–up new business project

The most convenient mode for getting business loans are the Banks. However, at times, the organizations seeking business loans can be deprived of the same, due to various reasons.

Keys to qualify for a business loan:

  • Ensure you have good credit history – The credit history is reflected in the credit score. Your credit record should hence be clean.
  • Repayment – the organization seeking the loan should essentially have the ability to repay the loan. While applying for a business loan you should be able to exhibit to the money lender, be it a bank or any other institution that you are willing and capable of repaying the loan. If the money lender is a bank it will generally look for past three years –
    • Personal tax returns
    • Balance sheets
    • Profits and loss statements
  • Sources of Collateral –It is advised that a minimum of 3 collateral resources should be shown to the lenders so that you can ensure your application for a business loan is not rejected. These are:
    • Assets – Lenders would in actual fact, like to see if you have assets with resale values which meet or exceed the total amount of loan.
    • A blanket lien against the business assets may be required. It provides maximum protection to the lenders which subjects the borrowers to give the borrowers all the assets, in order to satisfy the debt.
    • Personal guarantees – Lenders can provide personal assets to the potential lender which would eventually exhibit your seriousness to make this business proposition a success.

In short, one just needs to demonstrate financial responsibility to the potential money lender.

  • Business Plan – The effectiveness of the business plan is another necessary requisite. The plan should be practicable. The necessary expertise to make the proposition work should be handy.

It is advisable to start with an institution that you already are associated with for getting a business loan.   Rejections are possible initially however if above mentioned points are in check you wont have much of a problem in getting a business loan.

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