SMEs (small and medium enterprise owners) generally need financial assistance to grow further and often seek to apply for loans for their businesses: unlocking their potential to spread their wings.

Nevertheless, the unfamiliarity to loan application process hinders business owners when they consider for loans.

The followings are the tips for business owners to take note when applying for loans

State the business purpose

What is the purpose of the loan? Explain whether the loans are for fixed asset acquisitions, and expansion plans or procuring inventory.

Credit Report

When applying for loans, it is important to ratify the borrowers and guarantor’s track records for settling the credits.

Show your strategy and capability for payback

Banks need to determine the borrower’s ability to repay the loan he/she is going to apply. It is also taken into consideration that the borrower is committed towards the loans and expenses. The bank will calculate risks of the loans: the more solid the financial statement, the more creditability of borrower.

Financial Health

It is necessary to have proper records and accounting practices. It is helpful to have financial reports in a timely manner as to avoid rushing things at last minute. It helps to gather information for loan application and speed up the process.

Leveraging with collateral

For a higher amount of loans, collateral is required to reassure banks in case of default. Typical collaterals are fixed assets including business equipment and property.