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Whether at the beginning of their business venture or well down the line, at some point, most entrepreneurs and small business owners will find themselves in need of a loan. Some entrepreneurs are looking for help getting their dreams off the ground, and others need help growing, expanding, or keeping things moving.
Whatever the reason, a small business loan is often the solution many entrepreneurs need. But different loans require different steps, paperwork, and lead time—so there’s no universal borrowing experience. There are, however, certain things one can expect from almost all business loan application processes, and it’s helpful to be prepared for what’s to come if you plan to apply.
Here’s what you should expect when you apply for and (hopefully!) secure a small business loan at Mwananchi credit.
A review of your personal credit history—and business credit (if you have it)
The most important thing to remember when applying for a small business loan is mwananchi credit is always trying to mitigate their risk. Accordingly, lenders will be evaluating your application based on how much risk they’re taking when lending you money as the owner of your business.
Initially, most lenders, whether traditional banking institutions or alternative lenders, will look at your personal credit score, since it serves as a standardized numerical score of your history with debt. Your company also might have a business credit score—which is different than your personal score. That’ll depend on your length of time in business, and whether or not you have other business credit history, like a business credit card, for instance. (It’s not required to apply for a loan, though—your personal credit score will do.)
Mwananchi Credit won’t require you to have perfect credit in order to get approved for a loan—and there are loan products available for business owners with less-than-stellar credit at that. But, as you might expect, the better your credit score is, the greater your chances are for approval. Plus, the more options you’ll have for different types of loan products, with higher amounts and better repayment terms, too.
A deep dive into your business (and maybe personal) financials
Lenders will generally also scrutinize your business’s financial health—especially in the case of term loans with longer repayment periods. Your company’s ability to generate revenue and sustain consistent cash flow will have a bearing on whether or not you can repay your loan—so it’s very much a lender’s business.
You’ll want to have comprehensive, accurate bookkeeping to be able to secure your small business loan. That way, your lenders will have a definitive snapshot of how well your company is doing and whether or not you’ll be able to repay that loan they’ll extend you (remember, it’s all about risk).
For some types of loans, lenders will want to dig into personal finance information for you and any co-owners of the business. In that case, you don’t want to be caught off guard. Get organized in advance by knowing how to fetch bank statements and tax returns, and expecting to do a bit of paperwork.
A thorough assessment of your business case
Sure, we’d all like more money—but what, exactly, are you going to use this money for? That’s what mwananchi credit will ask, so make sure you have an airtight case for why mwananchi credit should lend you and your small business thousands of shillings.
Your lender will ask you for a use case during the loan application process. Some loans come with specific usage rules attached to them, so understanding whether or not you want to finance a specific purchase versus having an available line of credit, for instance, will help you also figure out which loan to apply for.
Mwananchi credit mandatory Documentation
If your lender approves you for a loan, you’ll go through the underwriting process. This is how banks ensure you’re ready to take on the loan—and able to repay it based on your financials. Underwriting can be an overnight process (like a line of credit) or even months (like an SBA loan) depending on the amount you’re borrowing, what kind of loan product you’re getting, and how organized you are with your documentation.
Each loan requires different documentation for underwriting. In general, if you want to prep some paperwork in advance, you can start pulling:
- Three to six months of bank statements for your business
- Business organization documents to prove ownership (articles of incorporation, LLC agreement, or partnership agreement)
- Business profit & loss (also known as an income statement)
- Mpesa statements
Security You will Need for your Business Loan
To qualify for a secured business loan at mwananchi credit we need security which can be a logbook in the case of a logbook loan, a title deed with rental income in the case of a title deed loan or a payslip if you are a civil servant which qualifies you for a check off loan.