To get the best terms on business loans, jot down these steps:
Business loan is a business too. Narrow down lenders after doing your research on them. It is always good to start by building good relations with the lender. Discuss what the company is all about. Build the trust factor.
Decide what the money is needed for. Approach the lenders who grant the type of loan you seek. A loan may be required for many reasons like financing equipment, real estate, working capital needs and so on. In short, approach the right lender. Also decide where to avail the loan. This could be nationalized banks, commercial banks, private banks, financial institutions or NBFCs.
Decide on the amount of loan you seek. Overestimating or underestimating the loan amount can be a problem. It is also good to have your research documented.
Make sure you have a good Credit Score. Credit score decides the fate of your loan. A credit score of 700 is favorable and the business loan could be sanctioned.
Arrange and acquire all the documents needed for a loan application. Documents required are a business plan, business owners resume and financial statements like Profit & Loss A/c, Balance Sheet and Cash Flow Statements, three years ITR and so on.
Be prepared to pledge collateral. Some lenders may seek security to give loans.
Understand terms and conditions of the loan as stated by the lenders. Analyze them based on your business and financial needs.