Friday, 1 March 2013

5 Tips To Get Your Small Business Loan Request Approved

To start a small business is finance and it’s very critical to find the proper source of finance for your business operation. At first all business need capital for their business, because as starting of business we need inventory, marketing and incorporating expenses. That is why you need finance which is a steady source of funding before you can start.

However, small business loan are not easy to get, that’s why many shut their ventures soon, and the bank has strict policies for business loan, which is similar like a hurdle. For approval your small business loan here are 5 useful tips.

Personal Credit History

For the small business owner, the first thing to acknowledge is that, it is not too easy to get loan from bank. There many things they notice and personal credit history is one of them, because creditors observe the history of the borrower of a loan, to check out their details of payment. If you have years of business, there are maximum chances to cross check your business history. That is why it's important to clear your credit history, which impress the creditors. If your credit history is not correct then it will hurt your chance of getting a loan.

Personal Asset or Collateral

Well, the security of the lender is generally the collateral or personal asset to ensure that he will pay back the loan in time. Moreover, the collateral can be in the form of equipment, machinery, real estate, inventory and accounts receivable. Anyhow, if the borrower does not pay the loan then his property will be seized. It is some kind of insurance or guarantee that, if the borrower does not pay their loan than they can capture his property and get their amount. Sometimes a lender asks a third party to sign agreement to pay back the loan in case you are unable to pay back.

Capital for Business

For your business, capital is the most important thing, because when you request a loan from the bank for your new business project. It is important for the lenders know how much are you investing in your business plan, it shows that how much are you interested in it and has the chance of being a defaulter.

Your Ability

The bank or creditors always check the capacity to repay the loan and they saw you have enough potential to generate cash from your business. It allows to measure the borrower’s credit history, which reflects the future payment potential. Moreover, the debt to equity ratio is also used for measuring the potential for future payment of the loan.

Personality and character

When you think to borrow a loan then it is obvious that the lender will look into your personality and character traits such as determination and motivation towards the business idea, eagerness to achieve, risk taking potential, realism, past experience and learning. All this quality will help to evaluate your potential to run a business and repay the loan at the same time.

Author’s Bio

Moumita Dasgupta is a freelance financial blogger who collects all the latest fiscal information and puts them in her blog, Here she advises the small business owners to adopt the best ways to get their loans sanctioned easily.

Author BioMoumita Dasgupta, a financial blogger and the owner of bizandfiz, shares her knowledge and expertise of various finaical topics. A clear view on market, business, forex, funds, personal finances etc. are the subjects she perfectly underlines thorugh her articles.


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