How to receive the best terms on a small business loan?

  • Business Loans
  • 1 Months ago
How to receive the best terms on a small business loan?
HIGHLIGHTS

  • Introduction
  • What is the procedure for applying for a small business loan online?
  • How to receive the best terms on a small business loan online?


Introduction

Covid-19 has impacted small businesses the most and continued to strain their cash flows. One way to meet your business requirements is by borrowing the funds. If you plan to take a small business loan online (at best terms), this is for you.

Small business loans taken via traditional ways have numerous hassles and never-ending documentation requirements. Today, you no longer need to go through that pain. Small business loans are available easily and conveniently online

Shriram City Union Finance (from now on referred to as 'Shriram City'), having a legacy of 45 years, offers small business loans to finance your business requirements.

What is the procedure for applying for a small business loan online?

Don't you worry! The online small business loan procedure is way easier than it sounds.

Steps to be followed while applying:

  1. Open the website of your desired loan provider and navigate to the loan application section.
  1. Select the type of loan you want to avail. In this case, it will be a small business loan.
  1. Once clicked, it will lead you to fill an application form. The application form will contain the following details:
    1. Name
    2. Address 
    3. Mobile Number
    4. PAN 
    5. Amount of loan being applied for
    6. Details about the business
  1. Once you fill the application form, the next step is to attach the documentation required by the loan provider. The general documentation requirements are:
  1. Identify proof (Passport, Driving License, Aadhar Card)
  2. Address proof (Passport, Gas Bill, Electricity Bill)
  3. Income proof (Trading/Profit and Loss Account, Balance Sheet, Bank statements)
  1. Post document submission, the back-end team will quickly go through it and get back to you.
  1. Shriram City will then grant the loan, and you are ready to get the business going.

At Shriram City, the approvals are as quick as possible. The faster you get your funds approved; your business activities will speed up. Time is of the essence, as a loan on time can save your business along with opening your perspective, boosting your operations day in and out, and improving your profitability. Thus, make a wise decision while selecting your loan provider.

How to receive the best terms on a small business loan online?

To get the best terms on a small business loan online, you need to understand and analyze the below-mentioned details on an overall basis and not in silos:

Credit Score:

A credit score refers to a number assigned to reflect the creditworthiness of an individual or a business. While taking a small business loan online, it is essential for companies to check their credit score and whether it matches the eligibility criteria set by the lender. Small businesses should also ensure that their creditworthiness is never compromised as it will affect any present or future funding taken by the companies. For this, timely repayment of principal and interests along with any payments to creditors is significant. A minimal number of defaults will help to maintain a good credit score.

Capital Investments:

Capital investments refer to the investments made by the company to improve its business goals. These are usually done by purchasing a stake in long-term securities or assets, including land, machinery, buildings. Capital investments help improve a company’s cash flows as the income from these investments is added to the current cash balance of the business. A higher amount of capital investments will attract better terms as lenders will look at them as an additional source of income which will, in turn, reduce the chances of default. While taking a small business loan online, businesses should ensure they have an appropriate amount invested in the capital assets to get the best terms on the loans taken by them.

Capital Structure and Income Status:

The current capital structure plays a vital role in getting the best terms for your online small business loan. The company's amount of debt will be assumed as a risk factor by the loan provider. The higher the debt, the riskier the company is, and the higher is the default probability. In such a situation, the lender is unlikely to provide favorable terms to the business as he has to cover his risk. Moreover, the income status of the company is a crucial matter while assessing the terms of a loan. The higher the net income, the coverage ratios improve. When coverage ratios improve, the default probability decreases. Therefore, the lender is likely to give better terms on your loan. Thus, businesses must ensure that their debt to equity ratios remain low while their coverage ratios improve. This will help to get the best terms on a small business loan online.

Security:

Security refers to the charge on assets created by the borrower favoring the lender as protection if the borrower defaults. Security or collateral can be an asset, be it personal or business property. Therefore, small businesses must ensure that they have a security or collateral which adequately covers the loan. This will help them get easy small business loans which are also quicker as banks would have a surety in hand in default. Amongst other things, businesses should check who will bear the cost of creating charges and the lender's rights to debit such an amount from the loan account. They should also see whether security provided can be withdrawn in full or part in the future, along with clauses mentioning additional security.

Eligibility Criteria:

Eligibility Criteria refers to the minimum requirements to be met by the borrower to apply for the loan. Every lender has set eligibility criteria consisting of various factors like minimum turnover of the business, minimum years of operation, owner's age restrictions, legal and registration requirements. Before applying for any small business loan online, companies should confirm whether they fulfill all the criteria mentioned by the lender. This will further simplify the lender's process and help you get the best terms for your loan.

Once you have checked every item in the list above, getting the best terms on a small business loan online is almost a guarantee.

Shriram City provides bare minimum eligibility criteria, customized loan solutions, and competitive interest rates based on individual profiles, which will solve all your financial problems.

Conclusion

Today, the process of availing of small business loans has been streamlined. Various options will help to get easy small business loans online. Just understand the terms well, check whether you meet the eligibility criteria and you are all set.

The small business loan procedure at Shriram City Union Finance Ltd is vastly simplified. So, keep the above points in mind and make the right choice.

In case of queries, you can contact the support center by calling on 1800 103 6369. In addition, the customer support team can address your questions via email at grievance@shriramcity.com.