Eventually, all companies need a financial push that would increase the performance of their business. This is where business loans come into the picture. Business loans help in various projects of a company, including expansion and purchase of materials or machinery. But have you considered whether your business is eligible for your loan application to get sanctioned? To reduce the chances of your application’s rejection, certain factors must be considered before submitting the loan application.
Your credit score indicates your creditworthiness and the solvency of your company, making it a significant factor to set the amount of money to be loaned and its interest rate. Having a high credit score is one step up the ladder to get your preferred loan amount approved.
The positive cash flow of a company indicates efficient management, which is a huge factor in determining the amount of loan to be lent. The liquidity status of a company, cash inflows, and outflows, and its turnover rates are thoroughly assessed by the lenders.
It is essential to have a thorough business plan for your company with a list of finished projects, ongoing projects, future projects, marketing strategy, sales channels, and estimated sales projections to convince the lenders. Your lender should be confident about your capability to repay the business loan.
Assessing your business performance showcases the income generated by your business. A business with a good revenue inflow has a higher guarantee of loan payback, but the same cannot be said for a business with the lower financial performance or overall performance.
Availability of Collateral
A business owner can avail of a loan by hypothecating an asset to cut down on the risk of that loan. Such collaterals are required by most lenders to offer business loans. These loans can be availed by submitting certain collateral documents.
Age of the Business
Usually, a business of more than two years of age is more eligible to be granted a business loan than a newly opened one. By submitting the ITR, bank statement, and other proofs of its financial stability, such businesses can avail of the loan.
Other criteria for loan eligibility also include the age of the individual and the company’s repayment history. If you are looking for the perfect business loan for your company, Accord Financial business loans are available to help your business flourish.