The smooth flow of finances makes for an indispensable part of running a business. It ensures that your business activities run in accordance to the plan while also providing capital for business expansion. There are several ways such as crowdfunding, angel investors and personal savings that can be used to generate funds for business. However, a business loan is a common way of funding and can let you access a large sum of money. These type of loans are offered by leading financial institutions.
Banks immensely review an application before approving a business loan. These help in gagging the repayment capacity of the business. Before applying for a business loan, you must be well-aware of the factors that are assessed by the bank.
Credit history – Banks consider the credit history to be an extremely important indicator of a borrower’s repayment capacity. It is essential that you and your business have a good score or it could dampen your chances of getting the loan approved. A personal credit score that ranges from 700-750 is considered to be a good score. Financial companies regard a lower score holder to be a potential risk.
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Collateral – While banks offer unsecured business loans, there are some secured loans that require you to generate a collateral. The secured lending will involve a collateral that can include anything from a real estate property to a high-value business machinery.
Business cash flow – Banks evaluate the cash flow of the business and use this as a driving factor for approving a business loan. A business with a low cash flow is regarded to carry a risk. For this purpose, the banking institution will ask you to provide a bank statement for the business, as well as for the personal account. The statements provide a clear understanding of the cash flow.
Documentation – Every business has a set of documents that continue to grow with its expansion. Before approving of a business loan, the bank will need you to present different documents that include identity proof, address proof, business license, financial documents, business ownership proof and more. These documents prove that your business is legal and the lender only offers a business loan after viewing the same.
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Lacking in any of the above stated areas can cause a hindrance in the approval of your business loan. Hence, ensure that you sort the same before applying for one.
Loans come to our rescue in times of unexpected financial emergency. While sometimes, loans help us sail through tough times, sometimes it brings upon a catastrophe on our future financial health. However, there is no denying that loans have become one of the most diversified offering in the modern world. Take an example of personal loans. Personal loans are a kind of unsecured loans which do not require any collateral. In times of utmost monetary emergency, personal loans are the best remedy to turn to. In fact, personal loans are offered at competitive interest rates for almost any reason today. These are not bound by stringent rules and policies, and can help you meet any desired monetary need at any desired time. Let us look at some of the best reasons for taking a personal loan over any other loan, especially if you are in a cash strapped situation.
- Personal loans can help your remodel your home – Are you thinking of remodelling your home anytime soon? If yes, a personal rescue could turn out to be your best bet. If you thought that using your credit card in this could be a better idea, let us keep you informed that credit card dues might charge your higher interest rates than personal loans. Let your personal loan add value to your home as per your own choices.
- Personal loans can help you improve your credit score – A good credit score is pivotal in justifying a stable financial health and eligibility for all future loans. A personal loan can actually help you improve your credit score. If you pay your loan in instalments for a good 6 months at least, it is ought to push your credit score on the greener side. Stretch your loan considerably and pay your loan amount in time, not too early! This helps in establishing a healthy payment history for you.
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- Personal loans can help finance your wedding – Personal loans are the most opted choice for couples today. Be it for their wedding purposes or travel after marriage, personal loans give you the flexibility and freedom to fulfil your wedding plans just how you dreamt of it! The big expenditures would not keep you concerned at your wedding, as you can comfortably pay off the loan in EMIs over the due course of time.
- Personal loans can help you pay your credit card debts – Credit card debts are often paid back with the help of personal loans, more so because the latter helps in keeping higher interest payments at bay. You can pay back your unsecured loan in easy EMIs and stay away from a vicious credit debt.
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Apart from these, personal loans also help you in starting a business, funding your higher education or even creating an emergency fund. It is almost safe to say that the perks of an unsecured personal loan can keep you covered against any ad hoc cash requirements. So, if you are looking for taking a loan anytime soon, a personal loan is deemed to be the safest bet for you.