5 Tips for Applying for Personal Loan for Business

Finance Guru Speaks: When as an entrepreneur you decide to begin your own business or look to expand your current business, the major challenge is more often than not is, gathering a loan for it. Although you may be full of innovative ideas for shaping your own business, without capital you have nothing to begin with. This is when personal loans come in very handy. However, as there are numerous loan options for small and medium enterprises (SMEs), such as HDFC Bank personal loan, Bajaj Finserv Personal loan, SBI Personal loan, you need to keep in mind several aspects before applying.

5 Tips for applying for Personal loan for Business
5 Tips for applying for Personal loan for Business
1. Get your business plan in place

Firstly, you need to prepare yourself to receive a loan approval and sell your business idea as a viable one. So go ahead and create an impressive business plan. Ideally, a good business idea should talk about the company's products or services, marketing strategy, financing requirements alongside a comprehensive and detailed description of the business. This should talk about the use of funds among other aspects. However, the most important aspect of your business plan is to lay down the future vision of the enterprise. Make sure that you work hard at this to come up with an innovative business plan that financial organisations would be looking to invest in. Also, you can consider insuring your business as an added advantage as financial institutions look for organisations which are insured and safe to invest in. Remember there is tremendous competition in the market and you have to give the bank adequate reasons to choose your business plan over another. 

2. Learn to Prioritise

When you plan to expand or start your own business, always think ahead.  Decide in advance the kind of capital you will need. It is advisable to not reach out to a bank without any financial backing. If you can manage to save a certain amount, let the bank or organisation know that you have set aside a certain amount as capital to help kick start your business. While you create and chalk out your business plan, set priorities for the segments that need financing and shape your business plan accordingly. Do not make provisions for unnecessary expenditures, as this will increase your personal loan requirement for business purposes. Be sensible and come up with a well-structured and systematic business plan. 

3. Study all available loan options

When you plan to apply for a business loan, it is always advisable to do some background research.  Instead of applying for a loan outright, review the various options that you have and learn more about the banks that lend commercially.  Read up on the guidelines and procedures currently in place when applying for a business loan. Different organisations have different criteria for approving loans for businesses. The tenure of the loan is also an important aspect that needs to be looked into. Once you start your research, you will find a plethora of options to choose from.  Available loans can have various tenures like short term (up to 2 years), intermediate (2 to 5 years) and long-term (more than 5 years).  Hence, you can choose which plan suits your business requirements as the interest varies with each type of loan. 

4. Choose the amount that you need and can comfortably repay

Be smart and plan well, leaving no room for additional expenses. Remember that you have to pay back the loan amount with interest so apply for a loan amount that you are comfortable with and can pay back within the allotted time, while simultaneously taking care of other expenses. 

5. Create an impressive profile for your business

When you decide to take a loan to expand or start your business, put your financials in place to ensure that the banks are satisfied with their background check. Ensure all the company accounts are in order. If you can add a few impressive references to your business plan it will only add to your credibility and make your case stronger.
Work on building a smart, compact and well-rounded business structure and ensure all the personal loan application requirements are met so as to increase your chances of bagging the loan you desire. 

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