If you have a great idea for expanding your business, you’ll need more than just enthusiasm to make it happen—you’ll need funding. You might consider using your savings, borrowing from friends, or reaching out to investors, but one of the smartest options is to get a business loan from a reputable non-banking financial company (NBFC). However, before you put on your best suit and apply for that loan, there are several important steps you should take to secure the best financial deal.

Start by setting realistic goals and finding a lending institution that offers the lowest interest rates for business loans. Here are some tips to help you get the best deal.

First, have a plan ready before approaching any lender. While a business plan isn’t always required for unsecured small and medium-sized enterprise (SME) loans, it’s a good idea to draft one. It will help you prepare your loan application more effectively. If you already have a relationship with the lending company, that can work in your favor. Make sure to check your company’s credit report and keep all financial records, such as income tax returns, profit and loss statements, and balance sheets, up to date. Take your time with the application; rushing it can lead to mistakes. Don’t hesitate to ask a customer representative for advice if needed.

You can use a small business loan for various purposes, such as expanding your operations, hiring staff, buying equipment, building working capital, or even investing in real estate. It’s essential to pinpoint the exact reason for needing the loan, as this will improve your chances of approval and ensure the funds are directed where they’re needed.

Avoid applying for a loan without evaluating your expenses and determining how much you actually need. Knowing your exact financial requirements can significantly enhance your chances of getting approved for the best loan terms. If you miscalculate, you could end up with too little money, leaving you in a tight spot, or too much, which isn’t good for your financial health. Create a detailed budget before applying for the loan to gain a clearer perspective on your cash flow and help answer the lender’s questions about how you’ll use the funds.

Your company’s credit history is crucial when it comes to getting a loan. It reflects your creditworthiness and ability to repay, so maintaining a good credit score (ideally above 700-750) can instill trust in lenders. Additionally, the age of your business matters; lenders are more inclined to approve loans for companies that have been in operation for over five years. Many also consider your business cash flow to assess your financial stability and repayment capacity.

You’ll come across numerous loan plans when searching for a business loan in India. It’s important to do thorough research and compare different loan schemes before making a decision. Pay attention to interest rates, repayment terms, and loan features to find the best fit for your needs.

One of the reasons small entrepreneurs favor business loans is the flexible repayment options they offer. Business owners can choose loans that fit their budgets without straining their finances. If you can handle it, consider a shorter loan tenure with higher monthly payments so you can pay off the loan faster. On the other hand, if money is tight, a longer loan term with smaller monthly payments may be a better choice. Using a business loan EMI calculator can help you figure out different payment plans.

To apply for a business loan, you’ll need to complete an online application form. Make sure your application is well-prepared to help the lender approve the desired amount at a reasonable interest rate. In addition to your business profile and plan, include your financial statements and personal information. Organize your documentation in a logical order to make it easier for the lender to verify everything.

Once you submit your application, the lender will take some time to review and verify your details before approving the loan. Many modern NBFCs use automated systems that can approve loans in just minutes, but if it takes longer, be patient. You can use your reference number to check your loan status or contact a customer representative for updates. If they reach out for additional information or documents, be ready to provide them promptly. Being proactive and patient can help you secure approval without unnecessary delays.

While some lenders may not have strict turnover requirements, they will still review your financial records to assess your creditworthiness and repayment ability. Improving your cash flow is vital, so focus on increasing funds flowing in and out of your business. Consider optimizing pricing, boosting sales, collecting receivables faster, cutting costs, and extending payables. These actions can reduce risk, enhance profitability, and improve your negotiating power for better loan terms.

Getting the necessary funding with favorable terms and low interest rates can significantly impact your business’s profitability and growth. By following these tips, you’ll present yourself as a trustworthy borrower, increasing your chances of landing a better loan deal. With so many options available in India, take the time to choose the right loan plan and prepare your application carefully to secure the best financing for your business.