Growth opportunities can slip away quickly if you don’t invest in them at the right time. A business loan can allow you to act swiftly, letting you focus on tasks that truly matter instead of worrying about finances.
However, obtaining a traditional offline loan can be exhausting, with extensive paperwork and stringent lender requirements, especially for first-time borrowers.
In this article, we will understand how a quick business loan can help you secure quick funding, along with the required documents and tips to increase your chances of loan approval.
What Are the Features of Business Loans?
Let us look at the various features of the business loans that help them stand out among other financing options:
- Flexibility in Repayment: Eligible applicants typically have the option to repay their loans over a period of up to 48 months*, allowing them to manage their finances more effectively. Additionally, business owners can opt for foreclosure, subject to a prepayment charge as per the lender’s policies.
- Swift Processing: Online business loans are known for swift processing and quick approvals. For example, SMFG India Credit, a leading NBFC in India, processes small business loans within 72 hours*.
- Multiple Uses: A business loan can be used for various purposes, including but not limited to covering operational costs, purchasing equipment, or supporting business expansion.
- No Need for Collateral: Many lenders do not require business owners to pledge their assets (either personal or business) to apply for a business loan. For instance, SMFG India Credit offers unsecured business loans of up to INR 75 lakhs* to all eligible borrowers.
- Convenience of Online Application: The entire process— from filling out the application to uploading required documents—can be done from the comfort of your office or home. This eliminates the need for in-person visits, reduces paperwork, and speeds up approval.
What Are the Various Documents Required to Secure an Instant* Business Loan?
Reputed lending companies typically request the following general documents when considering business loan applications:
- Basic KYC Documents: Applicants must submit mandatory documents for KYC (Know Your Customer) verification, including a passport-sized photograph, identity proof (such as a PAN card or driving licence), and address proof (such as a passport or voter ID).
- Bank Statements and Income Proof: Since lending firms consider the financial stability of a business while approving a loan, they require candidates to submit recent bank statements as well. Documents like ITR for the past 2 years, along with a balance sheet or profit and loss account, can serve as income proof.
- Business Documents: To verify the existence and ongoing operation of your business, you’ll need to provide essential business documents such as a certificate of incorporation. Depending on your business type, additional documents like a trade license or GST registration may also be requested.
How to Increase Your Chances of Securing Business Loans?
Getting approved for a business loan involves more than simply completing the paperwork. Following these tips can help your application stand out and improve your chances of approval:
- Increase Your Credit Score: Your credit score is one of the most significant factors in loan approval as it demonstrates your financial behaviour and reliability. To improve your score, focus on paying off existing debts, avoiding late payments on EMIs, and limiting credit card usage to 30% below the available limit. It is recommended to keep your credit score above 750 to increase your chances of securing a loan with favourable interest rates.
- Boost Your Cash Flow: Lenders prioritise businesses with a steady cash flow, as it indicates financial stability. If your cash flow isn’t at its best at the time of applying for the instant* business loan, consider collecting outstanding receivables or cutting unnecessary expenses. A healthier cash flow not only increases the chances of business loan approval but can also lead to better loan terms.
- Apply Strategically: The timing of your loan application can significantly affect business loan approval. Avoid applying for multiple loans simultaneously to prevent too many hard inquiries on your credit report, which may negatively impact your score. Further, be prompt in responding to any requests or questions from the lender to prevent any delays in processing.
Summing Up
Securing a business loan doesn’t have to be a complex process. By preparing the right documents and following the best practices outlined above, you can significantly improve your chances of quick approval. Remember that different lenders may have varying requirements, so research thoroughly and choose a lender that best aligns with your business needs. With proper planning and preparation, you’ll be in a stronger position to obtain the funding necessary for your business growth.
*T&C apply. Please note that final approval, loan terms, and disbursement process may vary based on lender policies and borrower’s eligibility.
Also read: How to Increase Your Chances of Securing Business Loans?
