You might have decided to take a loan to meet your business requirements and have already chalked out a plan in that direction. So just as you take a financial plunge, CGCL presents the 10 things you must know about SME loans:
Only banks can give SME loans:
This is a misnomer that prevails in the minds of many entrepreneurs even today. Though one can take business loans from banks, there are several other financial institutions like NBFCs that offer variety of business loans. In fact, the alternatives to the banks have emerged as more customer friendly in the past few years.
Do I need a perfect credit score to get an SME Loan:
While a good credit score is always preferable by the lenders before approving the loans, this is not the only criteria that would be the deciding factor in deciding whether to approve the loan? From the borrower’s perspective, if he doesn’t have a good credit score at present, he should look at the options of the institutions from where he can take loans from the current credit score and slowly and steadily should build up a good credit score so that he gets a good bargain in future.
Will I miss the bus due to the ‘long’ time taken to get a loan?
This is again a wrong notion that takes a very long time to get a business loan. Money matters are crucial and can affect the business if money is not handy when needed. Traditional business loans that banking institutions offered in the past did take time for processing, approvals and disbursals However, with the advent of technology and competition among lenders in this space have resulted in favourable scenario for the borrowers. Many institutions now offer spot approvals and assure disbursal within a week. We at CGCL for example are committed towards making finances available to our customers by completing loan formalities in less time.
Some of the documents that I need to keep handy:
Running helter-skelter in the last minute to arrange for documents can delay the application process. Instead, a little homework done before making a loan application can prove beneficial to both the lender and the borrower. For example, keeping documents like copies of PAN, Aadhar card and a passport size photograph can ease the KYC formalities. Copies of income proofs such as Income tax returns of the last three financial years, registration details of the business, a detailed proposal on the reason why the loan is required can speed up the process.
Have clarity of mind by asking these questions to yourself:
Loan is a financial obligation that needs to be dealt with complete focus right from the beginning. One must be clear about all facets of the loan that he is about to take. For this, one must put across questions to himself like
1) How much loan do I need? (It shouldn’t be more or less than required)
2) Do I have a plan on how to use the funds and about repayment of the same?
3) Where exactly am I going to utilise the funds et al