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10 Things to Remember When Applying For a Business Loan

10 Things to Remember When Applying For a Business Loan

Precision and planning are the key stepping stones when you are planning to take a loan for your new start up or for business expansion. Different banks will have a different set of criteria and each banks’ requirements will vary. Also, while business loans are unsecured loans by nature, some financial institutions might ask you to provide some sort of collateral from your end as a guarantee. There are numerous business loans available in the market and these business loans can be used for different reasons such as purchasing equipments, vehicles or building inventory, among other things.

Just having a brilliant business idea will not help you go all the way. Your ideas will need adequate capital for successful execution. Often many startups fail to gain traction within the early years owing to the lack of financing. So, here are a few tips and pointers to help you boost your chances of getting that much-needed business loan sanctioned.

1. Prepare a business plan

The way you envision your business taking shape is the key to getting a business loan successfully. Every financial institution will ask you to submit a business plan to gain insight into how you want your business to grow and thrive.  Work on creating an attractive business plan, which will capture the interest of banks. Your business plan must reflect the confidence and faith you have in taking your business forward. Emphasize on the components of your business you wish to improve upon and what are the measures you are taking or will be taking to achieve successful execution. The purpose of the loan should be clearly elucidated.

However, it is not necessary for your business plan to be very elaborate. Your plan can be lean, crisp and short but complete with all the necessary business details along with a summarization of the company, a financial model, what your company envisages, products, the team, and how you plan to utilize the loan amount.

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2. Ensure your paperwork is in place

The importance of having your paperwork in place cannot be stressed upon adequately. If you do not have proper documentation in place, the bank can deny you the loan. This fact holds true no matter whether you are applying for a personal loan for medical expenses or a business loan to expand your manufacturing operations. It is imperative that your documents are accurate and true to facts. All your supporting documents have to be spot on, as the banks seek strong security for the loan meted out. If the bank needs collateral, you need to furnish documents that will prove your ownership of the assets you are showing as collateral. If you are showing your own property as collateral, you need to endorse your ownership over the property with the title deed, tax receipts, and possession certificate among other documents. Documents supporting your personal identity like passport, driver’s license, phone bill, PAN card etc. will be needed. Also, if the bank requires a guarantor, you will need to provide the required documents for the guarantor as well.

If the bank needs collateral, you need to furnish documents that will prove your ownership of the assets you are showing as collateral. If you are showing your own property as collateral, you need to endorse your ownership over the property with the title deed, tax receipts, and possession certificate among other documents. Documents supporting your personal identity like passport, driver’s license, phone bill, PAN card etc. will be needed. Also, if the bank requires a guarantor, you will need to provide the required documents for the guarantor as well.

In order to gauge your creditworthiness, banks will require all documents related to your credit history, whether personal or professional. So be prepared to furnish your bank statements over the previous years.

Also, some other important business documents include SSI registration, Board resolution, project report, power allocation, credit information report, IT and ST returns for 2 years, partnership deed if your company is run in partnership etc.

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3. Check the eligibility for business loans

As part of your preliminary research, you must check the eligibility criteria for applying for business loans, so that you can plan your business expansion in advance. Although the eligibility criteria vary from bank to bank, here are a few basic ones:

  • You should own the business
  • You should be aged between 21 years and 65 years
  • The business should be 3 years old in the least
  • The annual turnover of your business should be $75000
  • The minimum profit per annum should be at least $3000
  • ITR statements for the past 3 years are needed

4. Be confident of the collateral

As stated above, all banks do not require collaterals, as business loans are largely unsecured by nature. However, you must be prepared in advance when you are preparing to approach banks for business loans. Do you something tangible to show as collateral? Will it be adequate security for the loan you are seeking? Do you have all the documents in place to endorse the collateral? Have you calculated the value of the collateral? Is the collateral worth the risk? These are a few questions you need to answer before going ahead with the application for your business loan.

5. Ensure that all your business statements are reviewed

One of the essential pointers for acquiring a business loan is to make sure that whatever documents you are providing have no loopholes in them. One of the most important documents is the balance sheet.

The balance sheet enlists your latest assets, capital and liabilities. Hence your profit and loss statements over the last three years are crucial. Be systematic with keeping records. Just to be confident with your papers, and if required get your statements checked by an analyst or a chartered accountant to ensure they are sound and error-free. It is especially important to get your statements audited if the scale of your business is larger.

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6. Assess the needs of your business and seek finance accordingly

As an entrepreneur, you must have the foresight to judge your business needs. If the loan you are seeking is to meet short-term business goals, you can seek alternate financing options. Study the financing options in front of you. Assess and compare the interest rates offered and choose accordingly.

7. Judge your capacity to repay the loan

Before you decide on the amount of loan you need, you must judge your capacity to repay the loan. Talk to a financial consultant if required and learn how much your EMI will be and assess your repayment capability in accordance with it. Remember banks will only loan money to individuals or companies who have a good credit history and will not default on the EMI.

Alternately, you can use an EMI calculator to find out the exact EMI you will need to repay. Chalk your business plan in accordance with it. If required, take small steps. Take small loans to meet specific goals and repay them comfortably to ensure a steady pace of business growth rather than taking an excessive burden and putting your creditworthiness at risk.

8. Shop around to choose the best bank

The bank or financial institution you choose to take the loan from is of extreme significance. Hence do not be hasty with your decision when choosing the bank. Extensive research is crucial. Study the interest rates offered by different banks and the tenure.

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Also, if you have friends who have taken loans from various institutions, talk to them about their experiences when shopping for business loans. Know more about the goodwill of the institutions you have zeroed in upon and then read up on their guidelines and policies so that you know what to expect and what to say when you approach them. When you do your homework, it will surely add to your confidence when you present your business proposal.

9. Insurance

While the bank will check your personal credit history for ensuring the security of the loan meted out, it might also need information relating to your insurance policies, banks need to be assured that if anything were to happen to the key partners, the loan will be repaid timely.

This is especially checked for new organizations, which are more dependent on the founders and are not steady yet. So etch your business plan accordingly so that the banks find no loopholes.

10. Assess other financing options

With the rise in business startups all over the world, there is no dearth of loan options for fresh entrepreneurs. When you are stepping into the business loan market, you will see that there are is a myriad of options before you. You do not necessarily have to approach a bank or NBFCs for a loan. There is peer to peer lending that has recently been gaining traction.

There are several private organizations that specifically cater to the startup companies which seek financing. Private and individual lenders are also feasible options. However, it is better that you learn about the credibility of theses lenders before taking the plunge. Use your time efficiently to get hold of the best deals for your business needs.

Conclusion

Preparing a business plan and approaching financial institutions for a loan is not an easy task. It takes a lot of foresight to learn the needs of the hour and prepare a business plan that will capture the interest of banks as a project worth putting their money into. Be smart and crisp, and trim any unnecessary costs to present a plan that cannot be turned down by lenders

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Tanvir Zafar

Software Engineer at GCUF

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Last Updated on September 20, 2018

How to Be Happy at Work and Find Fulfillment in Your Career

How to Be Happy at Work and Find Fulfillment in Your Career

If you’re going to spend 1/3 of our life at work, you should enjoy it, right?

Trust me, I know that’s easier said than done. Difficult coworkers, less-than-desirable tasks, or even just being in the wrong position can all lead to a lack of enjoyment and fulfillment in your work.

But what if I told you it doesn’t have to be this way? Or better yet, if you struggle with all of the above (and then some), what if I told you that enjoying your work and finding fulfillment regardless of those obstacles is possible?

Don’t believe me? I don’t blame you because I was there too. Before implementing the tips below, I struggled to get through each day, much less find real fulfillment, in the office. Now, even after the toughest days on the job, I still come away with feelings of pride, accomplishment, and fulfillment. The best news is, so can you.

If you’re ready to make those hours count and find happiness and fulfillment in the office, then read on to find out how to be happy at work and find fulfillment in your career:

1. Discover the root(s) of the problem

For this first step, we’ll need to think back to 8th-grade physics (humor me). We all know Newton’s 3rd law, “for every action, there is an equal and opposite reaction.” When you think about it, the same can be said outside of physics, and we see this law play out in our daily lives, day after day.

Simply put, all the issues we deal with in the office (and life in general) affect us in a noticeable way.

If you’re appreciated at work, like the work you do and receive frequent praise, promotions, or raises, then this will probably have an altogether positive effect on your life in the office.

But what if we reverse this? What if you feel under appreciated, get passed up for promotions, or get denied raises? This is sure to affect the way you feel at work on a negative level.

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So, before you can implement the steps of feeling happy and fulfilled at work, we first have to discover the reasons why you don’t feel that way already.

Think about it, write a list, or make a mental note. Run through all the reasons you’re dissatisfied in the office, and don’t hold back. Knowing the exact obstacles you’re facing will make overcoming them that much easier.

In fact, as a side-challenge to this article, I recommend picking the top three reasons contributing to your dissatisfaction at work and using the following tips to tackle them.

2. Practice gratitude for an instant uplift

Did you know the simple act of feeling grateful can increase your happiness and make you more fulfilled at work?[1]

Well, it’s true, and it’s scientifically proven.

Dr. Lisa Firestone notes that practicing gratitude “reminds us of what we lacked in the past.” Meaning, it serves as both a boost to happiness and a bit of a wake-up call that things have been or could be, much worse.

Trying to conjure up feelings of gratitude can seem almost impossible when your work situation seems bleak, but hear me out: There are incredibly easy ways to get started and it doesn’t involve trying to “force” yourself to feel grateful about things that stress you out.

For an instant pick-me-up, try this:

Find a loose piece of paper, a blank sticky note, or anything you can write on, be it physical or digital. List just three things that you are absolutely without-a-doubt thankful for in your life.

Now here’s the trick: Don’t just list what you’re grateful for, you have to list why you’re grateful for them, too.

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For example, simply saying “I’m grateful for my kids” will probably make you feel good, sure, but what if we could amplify the warm, fuzzy feeling into real, lasting motivation?

Instead, write the reason you’re so thankful for your children. Is it because they make you laugh and forget about other stressors? Or maybe they help to remind you of why you go to work every day in the first place?

Whatever your reasons may be, jot them down and keep your list somewhere you can see it while you work. A quick glance at your gratitude list throughout the day can provide powerful, positive motivation to keep going.

Bonus:

If you can find just three things to be thankful for that specifically relate to your job, and list why those things make you grateful, your list can also help you find fulfillment in your work itself which can give you an even bigger boost of positivity throughout the day.

3. Take meaningful time for yourself

We all know creating a strong work-life balance can be crucial to feeling satisfied in our jobs, but rarely do we ever address how we’re spending our time outside of work.

Many of us survive a 9-hour work day and commute home only to find ourselves busy with our personal to-do lists, running a household, and taking care of a child (or 2 or 3, and so on).

If you spend all your time working, whether in the office or within your household, you’re going to feel drained at some point. This is why setting meaningful time for yourself every day is highly important.

Look, I get it: I don’t know anyone in the working world who can shun all responsibility for a 3-movie marathon or happy hour with friends whenever they feel like it. But finding time for yourself, be it just 30 minutes to an hour, can really make a difference in how you feel at work.

This works because you’ll have time to actually relax and let the day’s stress melt away while you enjoy something just for you. The to-do lists and stressors will still be there after you’re refreshed and ready to tackle them.

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No time for me-time? Try this:

If you have a busy household, you’ll need to capitalize on a block of time you know will be completely uninterrupted. The easiest way to do this: try waking up 30 minutes to an hour earlier than usual (or push bedtime back an hour if you’re a night owl, like me) and take time to do something you enjoy.

This could be reading with a cup of tea, catching up on Facebook, spending time on a passion project—anything! As long as it’s meaningful to you, it works!

Bonus:

Starting your day with meaningful time for yourself can set you up to have a positive mood that lasts well into office hours, and having your me-time in the evening can give you something positive to look forward to during the day.

4. Get productive and feel accomplished

Don’t you just love the feeling of checking the last item off of a hefty to-do list? That’s because self-motivation can be a huge driver of positivity and success.

When we accomplish something, no matter how small, it makes us feel good, plain and simple. Applying this tactic to your daily work can be the motivator you need to find fulfillment during the daily office grind.

While there are tons of steps to get more done at work, I’ll share my personal favorite: Prioritizing.

Now, many people handle prioritizing differently. Some like to tackle the little tasks first so they can spend focused time on the big to-dos. Others like to knock out the big items first and get to the smaller ones when they can.

No matter which camp you’re in, you may be missing one crucial step: Time management.

So how’s this work? When you factor in the amount of time your priorities will take, it can transform your productivity ten-fold.

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Say you have three top priorities for the day. You might jump into the smaller ones or the bigger ones depending on your preferred method, and then find yourself out of time and bringing work home with you at the end of the day.

This is prevented when you factor in time. Knowing how long each item will take, or deliberately setting specific blocks of time for your priorities can help you accomplish more in the same 8-9 (or 12) hours that you typically spend at work.

Try this:

Take a look at your priorities and consider how long they should take. Pop into your Google calendar (or Filofax, whatever works for you) and schedule time to work on your priority items around any important meetings or events of the day.

The most important thing to remember is to stick to your dedicated time.

Often, when we know exactly how long we have to work on something (and honor this time limit), we’re motivated to get more done on time to avoid taking work home at the end of the day.

The bottom line

There’s no need to waste 1/3 of our lives feeling unsatisfied at work. Luckily, you now have the tools to get started, take back your time, and become happy and fulfilled at work again.

The only question is — which tip will you try first?

Featured photo credit: Ellyot via unsplash.com

Reference

[1]Psychology Today: The Healing Power of Gratitude

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