Small business owners avail a personal loan for business to meet its financial requirements. A personal loan or business loan for self-employed is availed by individuals for their business and to meet its working capital requirements. The funds availed can be used to buy inventory, start a new product line, and expand or grow business.
That said, the approval of the personal loan for a business heavily relies on the CIBIL or credit score of the borrower. The credit score determines the creditworthiness of the borrower. Notably, a credit score is the summary of the credit history – the amount availed as a loan in the past, its repayment diligence, and other factors. Hence, the CIBIL score is a very important factor that is considered while approving/disapproving a loan application.
Having said that, it is not always important that the borrower has a high CIBIL score to avail a loan for business. Therefore, he looks for how to get a personal loan with a low CIBIL score. Although the CIBIL score is very important and crucial aspect, still a personal business loan with low CIBIL score can be secured.
Let’s take a look at how you can avail a business loan for self-employed:
Check CIBIL Score Mistakes
At times, a low credit score is not really your mistake. It is because of some wrong transactions or entries entered in your credit history. This can take a toll on your credit score. So, check and ensure that there are no errors in your report. And if there are any, get them rectified to boost your credit score.
Prove Income to Support EMI
A personal loan with bad CIBIL can be availed if you can show the lender your income to pay EMIs. You need to convince the lender that you would be able to make payments against EMIs. For this purpose, you can declare income from additional sources, such as rent or salary commission. However, a loan for low CIBIL score candidate is usually offered at a high rate of interest.
Co-Applicant or Guarantor
also read: how to maintain credit score as an sme?
You can also apply for a business loan for self-employed by involving a co-applicant or guarantor. You can involve a friend or family member, if they are willing, to become a co-applicant with for your personal loan. If the co-applicant has a good score and steady income, the lender will grant you the loan.
Apply for Small Loan Amount
The lender is more likely to disapprove the loan application if you have applied for a high loan amount. A high loan amount with low CIBIL score indicates financial instability and more risk for the lender. However, if you apply for a low amount with low CIBIL score, the lender may feel less risky or secure to grant you the loan.
All these measures will help you avail a personal loan with a low CIBIL score. It is worth mentioning that every lender has different eligibility criteria and you are also required to meet them in order to get a personal loan for business approved. Additionally, you can also register your business for free at the Connect App by ZipLoan to build your business network. Through the e-marketplace, you can create a business profile, list your products/services, find business, discover new business opportunities, and build connections.