Top Mistakes to Avoid When Applying for a Business Loan- A reference to Delhi NCR

“Business ka expansion kaise karein? Ek business loan lene ka soch raha hoon!”

As a business owner in Delhi NCR territory, you probably have interacted with this topic multiple times. A business loan in Delhi NCR serves as a vital financial aid tool for organisations seeking facilities such as operation expansion, equipment acquisition and cash flow maintenance. Business loan acquisition requires more steps than appearing at a bank and leaving with funds.

Getting a business loan becomes difficult when potential borrowers remain unaware of the typical errors made by loan applicants. Read this article to understand how to avoid these pitfalls.

1. Skipping the Homework

“Loan toh le lenge, lekin terms and conditions kisne padhi hai?”

Moving forward with mortgage applications occurs since people fail to grasp lender demands together with loan programme regulations. Diverse financial institutions maintain separate evaluation processes, payment terms and variable interest rates for loans.

For example, according to HDFC Bank, yearly interest rates on business loans range from 11.90% to 21.35%. Similarly, ICICI Bank offers business loans with interest rates beginning at 13.25%. Comparing these possibilities is critical to make the appropriate decision.

2. Ignoring Your Credit Score

“Credit score kya hota hai? Mera score dekha nahi maine!”

The most fundamental aspect lenders analyse when they evaluate loan approval applications is your credit score. Loans may get denied and rates might increase if you have a low credit score.

Bajaj Finserv data shows loans are more likely to get approved when your credit score reaches 750 or higher. Loan applicants with credit scores under 650 face either application denial or receive elevated interest costs.

Solution:

Before applying, check your credit score through platforms which include Experian and CIBIL. Your credit score improvement will start with debt clearance and bill-time payments when your score stands low.

3. Not Defining the Loan Purpose Clearly

“Loan le lenge, baad mein dekhte hain paisa kahan lagana hai.”

Lenders demand straightforward explanations about your loan requirements. Donors look for concrete plans which they can understand easily so a poorly defined goal often results in denial.

For example, SBI's SME Loans need extensive paperwork describing the planned use of funds, such as working capital, equipment purchases, or business expansion. Failure to give this may cause delays or rejection.

Solution:

NetBar is a comprehensive business proposal which states precisely how you'll use your loan money for equipment acquisitions, advertising or new personnel.

4. Applying for the Wrong Loan Amount

“Thoda zyada le lete hain, zarurat toh pad hi sakti hai!”

Your loan application success depends heavily on carefully balancing the amount you request. Lenders may doubt your ability to repay when you request too much money yet applying for less than what you need both pose problems.

The loan calculator provided by Axis Bank helps borrowers determine what their EMIs will be when they apply for a loan. A loan of ₹10 lakh at 12% interest requires 5 years for ₹22,244 monthly payments whereas the same amount with a ₹15 lakh principal generates monthly costs totalling ₹33,366 per month. Extended loans beyond your ability to repay may result in financial detriment because your income does not match the total loan expenses.

Solution:

Lenders like Axis Bank offer no-cost EMI calculators which help you find a loan quantity within your payment capability.

5. Providing Incomplete Documentation

“Yeh document mandatory tha kya?”

In Delhi NCR, lenders often reject applications due to incomplete paperwork. Missing even a single document, like your GST registration or IT returns, can delay or derail your application.

Solution:
 

Refer to the documentation checklists provided by lenders, such as Kotak Mahindra Bank, which typically require:

• Business registration proof
• PAN and GST details
• Financial statements (last 2-3 years)
• Bank account statements
• Identity and address proof

6. Overlooking Hidden Charges

“Processing fees aur prepayment charges to suna hi nahi Maine!”

Without paying attention to other borrowing expenses borrowers tend to only think about interest rates.

Business loans from Bajaj Finserv apply a 2% processing fee to all transactions so you would pay ₹20,000 for each ₹10 lakh loan. The charges associated with prepayments vary between 2% and 4% of your running debt amount.

Solution:

You should check all terms before proceeding and request a complete initialization of expenses from your lender. Seek out a lender that presents clear loan terms along with complete cost transparency and no secret charges.

Conclusion

Applying for a business loan in Delhi NCR doesn’t have to be daunting. Avoiding these mistakes can save you from unnecessary stress and financial burden. Remember to:

• Research lenders thoroughly
• Maintain a good credit score
• Define your loan purpose clearly
• Apply for the right loan amount
• Complete your documentation
• Watch out for hidden charges

A little preparation can go a long way in securing the funds you need to grow your business. For more insights, check out the resources linked above.

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LoansJagat Team

We are a team of writers, editors, and proofreaders with 15+ years of experience in the finance field. We are your personal finance gurus! But, we will explain everything in simplified language. Our aim is to make personal and business finance easier for you. While we help you upgrade your financial knowledge, why don't you read some of our blogs?