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These are the few sources to avail finance for business. You can choose one of the sources according to your need and requirement. Mehul Mathrani says, before making any final decision, it is essential to consider all the points and circumstances.

A business loan can be really convenient for the self-employed as these can be used for several purposes which include business expansion, meeting operational expenses, providing fresh working capital, purchasing inventory, etc. However, getting a loan is quite harder for the self-employed as compare to a salaried professional, as it involves higher risks.

Let’s explore a list of factors to keep in mind while applying for a business loan with Mehul Mathrani.

Prepare a good business plan

A well-framed business plan is advisable as it will help you in convincing the lender to grant you the funds. Your business plan should clearly define your project’s objective, marketing and development strategies, revenue generation plans, etc. Since lenders consider your revenue generation plans to analyze your business’ viability and repayment capacity, so make sure you have a strong revenue model that explains how you would be repaying the loan on time and your anticipated use of the funds.

Be ready with documentation

Even if you have a perfect business plan with well-explained goals, lack of proper documentation can lead to a complete rejection of your business loan application. Before applying for the loan, make sure that you carry all the required documents which the bank may ask for. Documents needed to complete the process include last few years’ KYC documents, entity’s proof, income tax returns, audit reports, bank statements, etc.

Check your cash flows

Your businesses’ cash flow forecasts play a great role in your business loan approval. A solid history of high revenue generation increases the company’s chances of getting the loan approved. In case your business has a weak history including irregular or low cash flows, you may either have to pay a higher interest or your loan application might get rejected. Therefore, before you apply for the loan, double-check the cash flow statements and forecasts to make sure that your cash flow statement would be enough to repay your loan along with the interest levied.

Look at other borrowing options

As different lenders have variable parameters to assess your business’ creditworthiness. Therefore, do not limit your loan applications to specific lenders. NBFCs, and Digital lenders along with banks, also offer a platform to compare and choose the right business loan and also the suitable lender.

Assess your creditworthiness

Banks and financial institutions consider personal as well as your business credit history while assessing a loan application. A lower credit score shows you as more likely to default and can prove to be unfavorable to your loan approval chances. Hence, it is advisable to evaluate both your and your business credit report to ensure that your loan application isn’t rejected due to lack of credibility.

Identify risks that lenders assess

When you apply for a business loan, make yourself aware of various traits which may be risky for you. Possibly, it includes weak accounting system, low vintage, repetitive defaults in credit history or irregular revenue. Ensure that your business is not considered risky due to the presence of any such traits.

Final Words

So, these are the few useful tips from Mehul Mathrani, to make your business loan application win-win.

According to Mehul Mathrani - financial specialist, most of the time small businesses come up short at a higher rate than enormous organizations, consequently default chance is likewise high. This is the reason that private ventures have less access to credit than bigger organizations since loaning to an independent company is more hazardous and more costly than loaning to bigger organizations.

Disregarding every one of the obstacles, there are many financing alternatives accessible to little organizations. We should take a glimpse at some of the financing choices and manage the issue of 'How to Finance a Small Business?'

OWN CAPITAL / SAVINGS

Number one and the least demanding wellspring of a fund for a private venture is one's own investment funds. At any phase of a business, when a business needs capital, a business person can take advantage of his own benefits, for example, – stocks, common assets, land or adornments – to fund-raise. He can either pitch the advantages for fund-raise or take a credit on any of the benefits. Business people can put such close to home capital in their business as value capital, or they can offer credits to their very own organization.

FAMILY & FRIENDS

Parents, sibling, friends & extended relatives who have who have abundance money to loan might will back your business. They may loan the cash to the business as an advance or might will take a value stake in the organization.

BANKS

Banks have an exceptional office committed to giving advances to little organizations. To get a credit from a bank, organizations need to meet all requirements for bank's base criteria. Each bank has its very own criteria concerning procuring potential, yearly turnover, financial assessments, and so forth. There are numerous sorts of credits that banks offer, for example, working capital advances, term advances, advance against property, and so forth. Organizations can pick the sort of credits according to their necessity.

SMALL BUSINESS LOANS

Every nation has certain banks or establishments devoted to giving credits just to independent ventures, a case of such organization in India is SIDBI, in the USA there is SBA. The primary focus of these organizations is to loan cash to private ventures who have not possessed the capacity to acquire financing on sensible terms through typical loaning channels. These substances, for the most part, give cash as credits as it were.

PERSONAL LOANS

In the event that an organization can't get a business credit, the business person should seriously think about getting an individual advance and utilizing it in their business. The business visionary must have a decent record of loan repayment for raising an individual credit. We can get an individual advance by selling a home, gems, and so forth.

TRADE CREDIT

Some independent companies may have providers willing to offer using a loan. Such credit may extend somewhere in the range of multi-month to three months. This is a decent strategy for little organizations to satisfy here and now subsidizing necessities. This is a cheap strategy for a fund for an independent company.

VENTURE CAPITAL FIRMS

Investment firms are a sort of private value firms, the however investor gives assets to just those organizations who are in the beginning times of their business cycles. These are rising little organizations with high development potential. Funding firms put resources into developing organizations in return for value, or a proprietorship stake. Little start-up firms may get an arrangement of rounds of financing from investment firms.

Final Words

These are the few sources to avail finance for business. You can choose one of the sources according to your need and requirement. Mehul Mathrani says, before making any final decision, it is essential to consider all the points and circumstances. In the end, with intelligence and knowledge, you will win the game.

Financial Planning plays key role in making a financially stable life. With financial planning you can easily evaluate your long term and short term goals and able to create a balanced plan to meet those goals.

Let’s explore a few major reasons for adapting financial planning in life with Mehul Mathrani.