Nowadays, Small and Medium Enterprises (SMEs) faces many types of business constraints, such as competition, inconsistent demand and supply, increase in variable costs, shortage of manpower, high turnover rate, cash flow, limited resources and ever changing government regulation. All of these will have an impact on the business.
As such, there are many types of SME loans in the market, each of them can help the business to tackle the problem we mentioned above. Whether you are looking for solutions or need more cash flow for business expansion, the following are the important things you should take into consideration.
The loan’s interest rate, tenure, legal, and transparency are the key areas that will help your business to grow, achieving the objective of the company.
However, to get the loan application to approve by the lender are always the most challenging part for SME and business owners.
Banks have their requirements for any loan application. Being employed is one of them. Banks would require borrowers with the ability to produce income, as this is an indication that the borrower is capable of repaying the loan. It would be an automatic refusal if you failed to prove that you are under employment or producing enough income during the loan application process.
Even if it is proven that you are employed, but any changes to your income is a key factor that affecting your loan application. Although your credit rating does not indicate your current level of income, banks will require you to disclose the information for further assessment. A few Ringgit Malaysia less than the bank’s requirement; your application may be rejected.
The bank will have access to your all track records, this includes any late or overdue transactions; and whether you made minimum or maximum payments. It also indicates the remaining monthly balance. From here, the banks will assess your credit risk and understand whether you are a trustworthy borrower.
Some of us may not have credit cards and other financial commitments because we are too worried to spend. While this might be a good thing, but it does not help when it comes to the loan application. This is because the bank will not have enough information to make a decision, insufficient information to decide whether you are a good paymaster or vice versa.