Every business, whether big or small, needs access to bank loans to fuel their growth ambitions and maintain a competitive advantage in the market. If you are a small business owner, then you must know that easy access to funds ensure that you are able to run your business smoothly and are able to maximize the business opportunities you get. But being a small business, you can only afford a given number of employees who must multi-task and are always overburdened with work. You yourself must be juggling so many tasks that it must be hard for you to find out time to assess your long-term financial health. But this might lead to a situation where you are in an unwanted crisis situation due to improper financial planning as you have not created a contingency reserve.

In such a scenario, your only option to acquire funds for your business operations is through small business loans. Small business loans are provided by most of the banks and non-banking financial corporations for a variety of purpose. These financial institutions offer various types of loans such as: –

• Working Capital Limits
• Machinery Term Loan
• CC Limit
• Bank Overdraft Facility
• Line of Credit

How to apply for a Business Loan?

Once you have decided to apply for a business loan, you must now find an answer to the questions as to “How to apply for a business loan”. Read further to understand the process of applying for a small business loan. A business loan can be applied for through online application as well as the offline application process. But the procedure to be followed regarding the both is more or less same.

• Prepare a Business Plan: –You must prepare a comprehensive business plan for the proposal. In it you must include all the details regarding how much money you need, how will you use it, how will it help your business growth how will you repay it etc. It should be a detailed report as the approval of your small business loan depends on it. So, take plenty of time to prepare and seek professional help if necessary to make sure there are no loose ends.
  

• Prepare all documents: –You must prepare a set of financial documents and statements to be submitted with the proposal. Documents like Income tax returns, GST returns, audited financial reports, bank statements etc. must be kept ready and updated. You should not wait until the last minute, just keep these documents together at one place and if possible, make multiple copies to avoid any last-minute scramble.
  

• Identify a Lender: – Now there are numerous private as well as public financial institutions who are offering different types of business loans. You must identify one which suits your requirements best, and you are able to fulfil their eligibility criteria. Conduct thorough online research, make telephone inquiries and visit the branch before you zero-in on a lender of your choice.
  

• Negotiate Interest Rates: – Once you have identified a lender, select the type of business loan that you want to avail and discuss the interest rates and other charges. You should negotiate hard to lower the interest rates and waiver of some charges. Believe it or not, if you negotiate well, you will be able to save a lot of money.
  

• Submit the Proposal: – After everything has been finalized, all the documents are ready, application form has been filled now it is time to submit your proposal. Once you have submitted the application, the lender will start the process and hopefully in a few days-time will approve your application.
  

How to get approval for a business loan?

One of another important question is “How to get approval for a business loan”. This is nothing less than an art, which you must master if you want to get the loan for your business.

• Prepare a comprehensive proposal: – Your business plan must include all the relevant details including information pertaining to your past, present and future. Remember that loan applications are judged based on future prospects as well, so seek the help of a professional and prepare accurately projected financials to impress your banker about your seriousness.
  

• Build a rapport with your banker: – It is important that you build a rapport with your banker. Banks are more likely to approve loan applications from customers they know well and enjoy a good relationship with. So, you must submit your application with a bank or NBFC with whom you have a good personal rapport. Your accounts with the bank must reflect good behaviour and should have adequate balance.
  

• Provide the documents: – No matter how careful you are, there must be some documents that you would forget to submit. So, keep checking with your lender and providethem whatever documents they need from time to time to ensure speedy disbursal of your loan.
  

• Borrow only as much as you need: – Do not get greedy and ask for more than what you need. It shows a sign of desperation and is a red herring for the lenders. Remember that the loan carries interest on it, so there is no need to unnecessarily increase your interest burden if the money is going to lie idle.
  

• Apply with multiple lenders: –In order to improve your chances of success, you can submit your application with multiple lenders with different criteria. In case if one lender rejects your application, you need not start from scratch as your proposal would have reached advanced stages with other lenders as well.
  

• Regularly follow up: – It is important that you keep a regular follow up with your lender and make sure that the proposal is moving ahead with desired speed. Sometimes if you do not maintain a regular follow up, the lender might keep your file aside thinking you are uninterested. So, you must avoid such a situation.
  

Getting a small business loan for your business requirements might be a tricky task but it is certainly very much possible. You only need a little care and persistent efforts to be successful with your loan application.