If you run a business, you may require funds unexpectedly every now and then. If you are underprepared for these unexpected circumstances, the cost may deplete your savings or, worse, severely affect your business’ financial health. Business loans come in handy in this situation. They not only provide a large sum of money, but they are also approved quickly and disbursed within minutes.
They have become a popular financial choice in India nowadays because they can be excellent providers of financing in times of need. To qualify for a business loan, you must meet the lender’s business loan eligibility requirements. Use these simple ideas to increase your business loan eligibility if you want to ensure loan acceptance with favourable terms and circumstances:
- Reducing your liabilities proportion by a third is a good idea.
To minimize your liabilities proportion, pay off your existing loans before applying for a business loan. Your present debts and credit card due dates may make you appear to be a credit-hungry borrower, making it difficult to obtain another loan. Ideally, the total amount of EMIs you are now paying should not exceed 30-40% of your monthly income. If it’s more than that, pay it off before applying for a new loan.
- Maintain and improve your credit score.
Because business loans are unsecured, lenders assess your creditworthiness based on your credit score. A credit score of 725 or above indicates that you are a responsible borrower who makes timely payments. As a result, the lender sees no risk in granting you money, and your chances of acceptance skyrocket. A credit score of less than 725 indicates that you have a spotty repayment history, and the lender may label you as a high-risk borrower right away. As a result, they may reject your loan application altogether or charge you a higher business loan interest rate.
- List all of your sources of income.
Your income is also taken into account by lenders when determining your repayment capabilities. As a result, you must include all of your income sources, including any rental income, part-time income, or anything else, when filling out the online loan application form. This will demonstrate to the lender that you have sufficient income to make regular payments.
- Do not apply for many loans at once.
Lenders do a hard inquiry with a credit bureau when you apply for a loan to determine your default risk. If you apply for many loans at the same time, each lender will make multiple hard queries on your credit report, lowering your credit score. They may reject your loan application if they regard you as a credit-hungry borrower. As a result, it’s a good idea to evaluate lenders ahead of time and apply for the one that best meets your needs and business loan eligibility.
- Locate a lender who meets your business loan eligibility requirements.
Rather than applying to multiple lenders only to find out that you are not eligible for their loan, compare the eligibility requirements of several lenders and choose the one that meets your needs. Finserv MARKETS, for example, provides the following eligibility requirements that are reasonably simple to meet.