Applying for an MSME loan is quick and hassle-free but getting the loan application approved could be overwhelming, especially when the lenders are cautious about who they are lending money to. But this does not mean that you cannot get a loan. You need to remember that the lenders will evaluate your ability to make the repayment and if you can prove that you will pay back the debt in time, your loan application will be approved. Since you cannot do anything about the lending criteria, you can follow the tried and tested steps to enhance the chances of getting a loan. Here are a few tips to boost your MSME loan eligibility.
1. Track the credit score
You must ensure that the credit score is healthy. It is a priority for lenders and they will make the lending decision based on your score. It shows the financial state of the company and the ability to make the repayment in time. It is important to monitor your credit score and fix the inaccuracies so that the chances of rejection are low. If you have a good credit score, you will also be able to enjoy a low-interest rate.
2. Boost cash flow
With a healthy cash flow, you will be able to let the lender know that you have adequate funds to make the repayment on time. Ensure that your clients are paying you on time and it will give you the luxury of a large loan amount. You can increase the cash flow by giving cash discounts to the clients. Before you make the loan application, you need to work on building a strong cash flow balance.
3. Make tax payments on time
When you settle the tax payments on time, it will increase the chances of getting the loan with a low-interest rate. You need to ensure that the GST, income tax, and other taxes are paid without any delay. Prompt payment of tax helps improve the credit score and will also ensure that the lender has high faith in your business.
4. Repay lenders on time
Lenders will play a significant role in your credit score as they will report to the credit rating agencies about the borrowing and repayment habits. Hence, it is best to repay them on time. Make it a priority to build a strong professional relationship with the lenders and repay them as soon as you can. When you apply for the loan, your credit score will come in handy.
5. Complete the documentation
If you want to avoid any delays or chances of rejection of the loan application, you must ensure that you have the documents in place. Make a list of all the documents that the lender needs and keep them handy. It is also important to file the application form completely and perfectly.
Lenders across the country have tightened the lending norms because of the uncertainty in the economy. Hence, before you apply for an MSME loan, you need to understand the present situation. Assess the creditworthiness of the company and take steps to fix any issues that may be present. To boost the loan eligibility, you need to boost the credit health.
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