As any entrepreneur will tell you, getting a loan to cover emergencies or fund expansion can be a risky process. Unless you’re lucky enough to already have a strong relationship with the lender, obtaining a business loan requires more than just filling out an application. This is because most institutions that specialize in loans for businesses understand that, even in the best market conditions, lending carries significant risks.
Let’s delve into what reputable lenders look for when they approve loans for startups and small- and medium-sized enterprises (SMEs). The following qualities should provide you with a clearer understanding of what it takes to navigate the loan application journey successfully:
1) Good Credit History
Most lenders will want to examine both your personal and business finances, paying close attention to your payment history, outstanding debts, and credit utilization. A solid credit history can indicate responsible financial behavior and enhance your credibility as a borrower.
If you have built a good relationship with a lender, you can get some additional consideration for your loan application. For example, if you regularly use Maya Business payment solutions, these can be used as your underwriting criteria for a Maya Flexi Loan.
2) A Strong, Consistent Cash Flow
A steady cash flow reduces risk and provides lenders with a higher level of confidence in the borrower's ability to make regular loan payments. Cash flow is so important that, if presented with two businesses that have the same annual income, most lenders are far more likely to favor the one that has the steadier cash flow.
To make your cash flow more consistent, try streamlining your payment processes with Maya Checkout and Maya Terminal. These Maya Business solutions will allow your small business to receive a wider range of payments, ensuring optimal liquidity and more stable revenues.
3) Good Showings in Other Business Performance Metrics
While lenders are going to scrutinize your credit history, cash flow, and available collateral, they will also look at other performance metrics. These may include things such as profitability, cost efficiency, or even employee turnover in some instances. What they will examine will depend on the lending institution’s approach as well as the particular details of the offered loan product.
4) The Business’s Age
While startups can certainly secure loans, having a longer business history will usually work in your favor. Unless there are external market trends that are going against you, lenders will generally view a proven track record as a good sign. However, even fresh entrepreneurs can bolster their application by showcasing the other items on this list.
5) A Good Business Plan
A comprehensive and coherent business plan showcases your understanding of your business's goals as well as the external realities that affect it. Most lenders want to see that you have a clear roadmap for how you intend to use the loan to drive growth and generate revenue.
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6) Solid Presentation and Negotiation Skills
While having the previously mentioned qualities will make it much easier to secure a business banking loan, your ability to effectively present your business and negotiate terms can set you apart from others also vying for the same financing. Being able to identify a lender’s pain points and knowing how to adjust your presentation to address them can leave a positive impression and maximize the odds of your loan being approved.
Get Hassle-Free Small Business Funding with Maya Flexi Loan
The no-collateral Maya Flexi Loan is the business loan Philippines small businesses depend on—for several great reasons. With its simple application process, instant transfers into your Maya Business Deposit account, and low, borrower-friendly fees, the Maya Flexi Loan is the best funding source to expand your business or cover emergencies. Create a Maya Business account today and open a Maya Business Deposit account to get a Maya Flexi Loan offer as large as PHP 2 million.
Becoming a Maya Business account user also grants you access to one-of-a-kind deals like the Maya 1-2-3 Grow bundle. Maya 1-2-3 Grow is an exclusive product bundle that not only lets you qualify for a Maya Flexi Loan in just 3 months but also gives you a 1% merchant discount rate (MDR) on all QR Ph sales. This affords your business up to PHP 14,600 in transaction fee savings for every PHP 1 million in sales. You can also earn a 2.5% p.a. interest if you set Maya Business Deposit as your settlement account, translating to PHP 25,000 per year if you have PHP 1 million in your account. . Sign up for Maya Business today to apply for your first Maya Flexi Loan and enjoy the other perks of the Maya 1-2-3 Grow bundle.
