As leading SME loan experts, we at Findestination cannot stress enough how important a loan can be for the growth of small and mid-sized businesses. That being said, one can’t also deny how challenging it can be for small businesses to get access to funds. The long and arduous process itself dissuades business owners from pursuing such endeavors.
Yes, getting an SME loan is difficult but it isn’t impossible. As a leading loan provider in Pune, here at Findestination, we know of 4 effective ways one can easily get approved for an SME loan.
So without much further ado, let’s take a look at 4 tips that you can consider to make the process of getting an SME loan simple.
1. Make a business plan
No bank or financial institution will lend money to a business without a sound plan. These lenders feel confident in approving loans only to businesses that are capable of projecting a future of stable income for at least the next 4-5 years. A business plan helps lenders assess a company’s creditworthiness as well.
Therefore, it is in your best interest to create a business plan that sensibly projects your enterprise’s financial future. Make sure you depict these projections after taking the current profitability and sales trends of your business under consideration. A good business plan will involve an overview, financial forecast, and market analysis.
2. Improve your credit score
A lender will consider the business and the owner’s credit score to consider whether to approve a loan or not. Therefore, every measure possible should be taken to improve your credit score. A bad credit score will result in the straight-up rejection of your SME loan applications. Below are a few things you can do to improve your credit score;
- Repay all existing debts in a timely manner
- Try to maintain a credit utilization ratio that is less than 25%
- Maintain a stable income
- Keep a strong record of all repayments
3. Devise a Strong Repayment Strategy
Before approving a loan, sometimes a lender might wish to understand what your repayment capability is. So we would recommend having a repayment strategy ready that states how exactly you intend to clear the loan. This will give lenders the assurance they seek and they’ll have no qualms lending you the funds your small or medium enterprise needs to scale.
4. Cash Flow Management
To ensure the repayment capability of a borrower, the lender may assess the liquidity position of their business. As such, it is advisable to maintain a healthy cash flow. We suggest keeping your Debt Service Coverage Ratio in check. A substantial cash flow position will automatically make you eligible for an SME loan. Furthermore, this will also help you get loans with a lower interest rate.
If you too seek an SME loan in Pune, I suggest you reach out to the experienced SME loan consultants at Findestination for expert advice and assistance.
Call us now to learn more.