Applying for a Business Loan? Here are 5 Things to Remember

Starting your own business is not easy. There are million things you need to do to ensure that it will make it work. Marketing your product or service is another important consideration because this will help define the success of your business. More than anything, you will need capital. 

Being an OFW means you get to earn more than what you can earn here, but this doesn’t mean you have enough capital to start your own business. This is why lenders offer business loans for starting entrepreneurs like you to give you a fighting chance in the market.

Nonetheless, getting a loan for your business is something you need to think about and not rush. To help you decide if this is something you truly need, we listed five things to remember before you submit your loan application:

1. The purpose of the loan

You will never run out of lenders since they are more than willing to extend credit to those who truly deserve it. Nonetheless, they look into the reason why you are applying for a loan.

Before you apply, establish why you need to get a loan. Do you need additional working capital? Are you thinking of expanding or renovating your location? Do you plan to acquire new products to expand your existing inventory? Are you planning on investing in a property where your business will be located?

Lenders will appreciate if you establish the purpose of your loan and make sure you can back it up.

2. The amount of loan

Apart from the purpose, which must be realistic and something that can be achieved, you need to know how much money you are planning to borrow.

It is easy to aim for the maximum loan amount, but lenders are wary of this. They can’t grant you with P1 million if the purpose of your loan is to launch a product. Make an estimate of how much you need and make sure that it is realistic and in line with the purpose of your business loan.

3. The payment terms

Lenders want to get paid every month at this given rate. By the end of the loan term, they expect you to fully pay the amount. When applying for a business loan, don’t be afraid to negotiate payment terms. You can’t do anything about the maturity date, but you can ask your chosen lender to negotiate the rate and payment schedule. This way, you can assure the lender that payment will come on the agreed dates.

4. Loan documents

Each type of loan requires documents. Some loan facilities may be stricter and require more documentation, but the bottom line is lenders will ask you to submit something.

When applying for a business loan, make sure that all the documents are ready when you go there. Check the lender’s list of requirements, which are usually listed in their website for reference, and prepare them as soon as you can. This will reduce the processing time because you have all the necessary documents ready.

5. Your credit score

This is the most important consideration when applying for a business loan, or any other type of loan. Lenders look into this closely because they want to make sure that you are a responsible lender who is ready to fulfill his financial obligations. At the same time, you are in a better position to negotiate loan terms if you have a positive credit rating.

Before you apply, make sure you establish your credit standing first, starting with getting a credit card (which you must pay on time and in full). If you have existing loans, then make sure you pay them as well.

READ: How to Boost Your Credit Standing

Keep these five things in mind because this will serve as your guide on whether getting a business loan is worth it. Since you’re thinking of getting one, keep in mind that Balikbayad is here to help. Fill out our online application form for pre-approval and we’ll get back to you as soon as we can.

If you happen to live in Cebu, we are happy to announce that Balikbayad Cebu is already open. This way, we can better serve OFWs in the Visayas region and allow us to be part of your entrepreneurial journey.