With the rising financial uncertainties in the economy, small business owners are the worst hit. They do not have rich coffers like big corporates neither do they have the backing of the government funding. They are left to fight it out on their own.
And in most cases, they face severe liquidity crisis during the lean business season. This paucity of funds could be due to delayed payments from the clients or some unexpected contingencies coming up. In such a situation, it is imperative for a small business owner to look for an additional source of funding to supplement their fund’s flow.
There are some sources of funding available which require giving up on a part of the ownership in the venture. This situation is unwelcoming for a small business owner who has spent years building up the business from scratch.
Thanks to the booming financial services sector, there are now various types of funding options at the disposal of the business owners. One of the most popular and feature-rich offering that can be availed is that of a Business Loan without security. Business loans are preferred by business owners because they help them meet their financial liabilities in a timely manner without diluting their ownership.
About Business Loan without Security
Also known as an Unsecured Business loan, this is a special type of business loan which does not require pledging of any asset(s) to secure the loan amount. The eligibility of a borrower is assessed based on the past performance of the business and its credit profile.
There are many financial institutions that offer this facility to their customers. The major draw of business loans without security is that the amount can be used for any business requirement without any need to inform the lender regarding the final use of the money.
With the rising popularity of online financing and loan service providers, you can now comfortably apply for an unsecured business loan from the comfort of your home/office. Compare various business loan products available and then conveniently apply using the easy online business loan application form and upload some basic documents. When you apply online, you are assured of speedy processing and quick disbursals.
How to prepare a perfect business loan application?
One of the most important steps involved in availing an unsecured business loan is the preparation of a business loan application. This step requires you to seek help from an expert so that the application is complete in the true senses and portrays the true potential of your business. Here are some important steps involved in the preparation of a business loan application: –
- Check your CIBIL Score – At the present time, the CIBIL score is used by every lender to assess your business loan eligibility. Ideally, your CIBIL score must be above 700 to ensure that you get the best deal from the lending institution. Therefore, you should do a business loan CIBIL score check before moving an application. If your CIBIL score is above the required threshold, there are high chances of your application being approved, but if it is below the desired level, then you shall rather work towards improving your credit score.
- Assess your eligibility and requirement: You should check the eligibility criterion specified by the lenders on their website and then assess your eligibility accordingly. Consider applying only if your eligibility comes out to be higher than their requirements.
- Prepare a business plan: In order to leave a good impression on the financial institution, prepare a detailed business plan regarding your funds This should cover all the points, such as why you need the money, how it will help you improve your business performance, how it is going to enhance your profits, etc.
- Prepare financial data: Be sure to prepare detailed financial data to support your business loan application. This should contain details regarding the repayment plan as well as projected financials. It is a very important part of the business loan application, so make sure you take the help of a professional while preparing it as a single error could lead to the application being rejected.
- Prepare supporting documents: It is important to submit supporting financial documents along with your application. This includes quotations from suppliers, your bank account statements, net worth statements, income tax returns, KYC documents, and other relevant financial documents. All this information is required by the lenders to assess your eligibility for a business loan.
- Revise, revise, and revise: Before submitting your business loan application, please make sure that all the information that you have filled is correct and accurate. Any wrong information would lead to rejection of the application. Take help from a professional to ensure that your loan application is complete in all aspects and only then move ahead with submitting the application form and documents.
Availing a business loan is an excellent way to supplement your finances without stressing your business cash flow. Just make sure that you do all your research before taking the final step in order to ensure that you made a sound decision.