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4 Tips To Grab The Best Personal Loan For Self- Employed Deals

4 Tips To Grab The Best Personal Loan For Self- Employed Deals
4 Tips To Grab The Best Personal Loan For Self- Employed Deals
Almost half of the Indian workforce comprises self-employed individuals, which a recent study estimates to be around 473 million people.

Running and operating your business can be exciting, allowing greater opportunities for growth and earnings.

However, it can also strain your finances at times, making it harder for you to continue operations.

Personal loan for self-employed people can often help deal with such situations. Alternatively, you can opt for business loans if you are seeking funding for your firm.

The pointers mentioned below should aid your loan application and approval process, regardless of the type of credit your avail –

1. Build A Good Credit Score

Perhaps the most crucial determining factor for all unsecured loans is your credit rating. CIBIL maintains an extensive database of scores related to businesses and individuals.

These scores act as a measure of your creditworthiness. The higher your ratings, the better and greater loans you can avail in the market. At any point, you must ensure that your business credit score stays above 700.

Therefore, before applying for a personal loan for self-employed, make sure you possess the necessary scores. If your rating is lower, you can also build the same by following these tips –

  • Avail smaller loans and repay them on time.
  • Repay all your existing debt before applying for the larger one.
  • Maintain a proper credit utilisation ratio. This means you should only use around 40% of the credit limit for your credit cards.

Note that it might take a few months for your credit score to increase after you have followed these tips.

2. Hire An Accountant To Maintain And Audit Financial Records

Most lenders ask for financial records when you apply for business loans. While the same may not be necessary in the case of personal loans for self-employed, keeping such records handy will only aid your business in the long-term.

Whether you are availing the business loan to reduce debt or for some other reason, this credit application process tends to go better when you have audited papers for the company.

Hire a chartered accountant to determine the yearly profits from the company. The lender may want to look at this document to understand whether you can repay the borrowed money.

3. Prepare Necessary Documents For The Loan

Regardless of the type of loan you avail, proper documentation is vital for credit approval. Inquire about the same with the lender before applying.

Make sure you arrange the business loan documents beforehand to limit hassle. Furthermore, if all required papers are in order, loan disbursal occurs fast.

Some documents that are mandatory to avail such loans include KYC, proof of the business, bank account statements, income tax returns for the company, etc.

Bajaj Finserv is an NBFC that offers to fund to small businesses against only these few documents.

4. Provide A Guarantor

To further bolster your chances, provide a guarantor while applying for the credit. A guarantor refers to a person or entity that can repay the loan sum if you or your company fails to do the same.

The guarantor acts as a form of security for NBFCs in the case of unsecured loans. Keep in mind that failing to repay the loan also hampers the credit score of the guarantor as well.

Choosing the right lender is vital, as it can play a significant role in your loan availing experience. Opting for loans from reputed NBFCs in India is always the best option when searching for appropriate business funding.

Following the tips mentioned above should help you avoid rejection for your business loan application. Self-employed people also have a plethora of options when it comes to availing personal loans. Choose the perfect credit based on your repayment capabilities and needs.

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