Tuesday, May 22, 2018

Mistakes To Avoid While Applying for Business Loans

Businesses today are largely synonymous with business loans. It would be a monstrous gaffe to assume that business loans are only taken when the business has hit a rough patch. 

Business loans are also meant to sponsor business expansion plans. Unfortunately however, business owners often end up committing a string of mistakes while applying for these loans. 

Loans make for a crucial “decision” impacting the fortunes of your business—irrespective of whether you are securing them to fulfill your expansion plans or to tide over present financial difficulties

There are times when a wrong step can actually go on to derail short-term or long-term goals. Here’s a look.

Thinking that they can actually access these business loans only when they are struggling

Yes, it’s true that many businesses do apply for high-interest quick online loans like the ones from Lendgreen to get around $1000- $1500 credited to their accounts in no time. The fast loans help them to see through short-term financial crunch. 

However, as has already been mentioned above, business loans can be secured to plan your business expansion prudently as well. All your lenders would want you to do is furnish a thorough business plan. 

They want to find out whether you understand your business well or not—whether you know how it will make money or not. If you are able to provide a business plan which demonstrates your goals clearly then you would actually be considered seriously by your lenders.

You are not aware of your credit rating

Before applying for a loan you should be prudent enough to secure due information about your credit rating. There are many business owners who are simply not aware of where exactly they stand as potential debtors. All you need to do is approach one of the major credit bureaus to find out about your exact scores.

In fact, credit scores make for one of the common reasons why businesses are so frequently turned down by lenders.

Your financial records are not up-to-date

Most of the businesses out there are never ready with their precise and up-to-date business records when they are approaching lenders. This makes it difficult for lenders to measure the exact position of the business. 

Businesses as such can expect to be greeted by any one of the two types of responses – their application will either be rejected. Or else, they will actually be asked to invest more time to prepare their business records. 

Instead of wasting time thus, it is much better to prepare yourself properly before meeting the lender. Make sure you are getting your balance sheets, business activity statements and profit and loss statements up-to-date. 

Based on the scale of your business, you might as well be required to furnish your personal financial details as well.

Not reading the fine print thoroughly before signing

Blame it on your over–excitement (to have finally secured access to the money you need so badly) or anxiety (associated with repayment), there are times when entrepreneurs just don’t read the terms and conditions thoroughly before signing the agreement. 

This one makes for a major mistake – quite simply because it may lead to grave financial troubles later on. Make sure you’re not committing this mistake at any cost. Do not sign without making sure that you have actually understood each and every clause very carefully. If you have doubts, don’t forget to ask the lender before signing.

No comments:

Post a Comment

Join 1000's of People Following 50 Plus Finance
Real Time Web Analytics