Does Your Business Credit Report Matter When Applying for a Business Loan?

Does Your Business Credit Report Matter When Applying for a Business Loan?

16 Jun 2020
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If you want to apply for a business loan, then you will be asked to furnish the financial institution with your business credit report or business credit score. Your report reflects your creditworthiness and is of paramount importance for approval of any business loan. This becomes especially important if you are applying for a zero-collateral or unsecured loan. Remember, your business credit report encompasses your past repayment behavior and credit history. To put it simply, a good business credit score will be instrumental in ensuring that your business loan is approved.

Understanding the key variables of a business credit report: Your business credit score will consist of the following key variables:

  • Your repayment history regarding business credit cards.

  • Your repayment history of existing and past business loans, along with other credit availed.

  • An overall picture of the credit utilised by your business.

  • It also comprises details regarding the nature of your business, trends pertaining to the particular industry, and details regarding promoters.

  • The relationship of your business with the supply chain.

How is a Business Credit Report Prepared?

You must understand that the above-mentioned key variables are provided to financial institutions in the form of a business credit report, which, in other words, summarizes your business credit score. 

Impact of Business Credit Report on Your New Loan Application

Your business credit score allows the borrowers to assess whether you will meet the repayment obligation on your new loan. Besides, it also determines the interest rate on your business loan. A good report can allow you to negotiate on the interest charges. Once a financial institution receives your business credit score, it will then use it to either approve or reject your loan application.

Tips to Improve Your Business Credit Report

If you have a low business credit score, then it can negatively impact your chances of getting a business loan. You can resort to the steps outlined below to improve your business credit report:

  • You must repay your old debts besides adhering to the timeline for existing payments.

  • You must endeavour to have minimum debts.

  • You must limit your attempts to avail fresh business loans.

  • You must make all efforts to keep your personal and business finances separate. In other words, don’t use the debts taken for your business for personal reasons. Conversely, you must not use personal funds for business purposes.

  • You must keep a tab on your CIBIL rank. If there are any inconsistencies , you must report it to the credit information company.

  • According to industry experts, your credit utilization ratio should be in the range of 25%.

  • At times, it is possible that your credit score is low because you have not taken any business loan. In such a case, you can take a small business loan. Once you meet the repayment schedule, you will have a good business credit report.

Things to Keep in Mind When Applying for a Business Loan

Here is a list of the crucial checks you must follow while making an application for a business loan:

  • Prepare a cash flow forecast.

  • Zero in on the correct business loan.

  • Opt for flexible repayment tenures.

  • Be sure of the amount of money required and the purpose of taking the loan.

  • Compare different lending institutions, and select a business loan with the best terms and conditions. On Finserv MARKETS, business loans are collateral-free, which means you don’t have to mortgage your personal or business assets to avail a loan. The entire process is online and can be customised according to your requirements. What’s more, you can select between short-term and long-term loans as the repayment tenure ranges from 12 months to 60 months.

Types of Business Loans Available on Finserv MARKETS

The business loans available on Finserv MARKETS will allow you to meet the manifold requirements of your business – be it starting a new business, expansion and acquisition, or meeting the working capital requirements. On Finserv MARKETS  you can avail different types of business loans such as:

  • Start-up business loan

  • Mudra loan

  • Business loan for women

  • Business term loan

  • Working capital loan

  • MSME business loan

Your business credit report or business credit score is crucial for availing a business loan. Besides having a healthy report, you must always select the right type of business loan from the right lender. On Finserv MARKETS, your business loan is approved online within 3 minutes and an amount of up to Rs. 30 Lakhs is disbursed, in your account within 24 hours, post approval. These collateral-free loans can be availed with minimal documentation and no hidden charges.

 

Finserv MARKETS, a subsidiary of Bajaj Finserv, is a one-stop digital marketplace that has been created for consumers on the go. It offers 500+ financial and lifestyle products, all at one place. At Finserv MARKETS, we understand that every individual is different. And that’s why we have invested in creating a proposition – Offers You Value. A value proposition that ensures you get offers which are tailor made for you. We also offer an amazing product range and unique set of online offers across Loans, Insurance, Investment, Payments and an exclusive EMI store. Be it in helping you achieve your financial life goals or offering you the latest gadgets, we strive to offer what you are looking for. From simple and fast loan application processes to seamless and hassle-free claim-settlements, from no cost EMIs to 4 hours product delivery, we work towards fulfilling all your personal and financial needs. What’s more! Now enjoy the same benefits in just one click with our Finserv MARKETS App.