With digital technology, accessing business loans have become significantly easier. Now, small business owners can apply for loans online and receive feedback in a matter of hours. While digital business loans offer convenience and speed, there are some mistakes that business owners make that affect their ability to access these loans.
Not having the required documentation
To be approved for a digital loan, you’ll need to provide certain documents such as your ID, financial documents, and business registration documents. Not having all these documents can result in your loan application being delayed or even rejected. In some cases your application might be rejected.
Tip: Check the requirements beforehand and make sure you have everything you need before submitting your application. It’s important to upload clear, legible documents.
Giving incorrect or outdated information
Before a lender gives out a loan, they carry out a thorough verification of the information/documentation you send to them. Providing incorrect or outdated information can lead to your application being rejected.
Tip: As a business owner, you should make sure you know the validity of your business documents and renew them when needed.
Applying for the wrong type of loan
Make sure that you’re applying for the right type of loan that meets the needs of your business. If you’re not sure what type of loan you need, don’t hesitate to seek guidance from the lender. Most digital loan companies have descriptions of their available loan products on their website.
Applying for the wrong type of loan can result in a rejection or borrowing more than what you actually need.
Tip: If you’re unsure what type of loan your business needs, contact the credit provider’s customer service for clarification.
Ignoring the fine print
Before signing any loan agreement, make sure to read the fine print carefully. This will help you understand the terms and conditions of the loan, including interest rates, repayment periods, and any fees associated with the loan. Ignoring the fine print can trap you in an unfavourable loan agreement.
Tip: Don’t assume the meaning of terms and conditions. It’s best to consult a legal professional to explain the details.
Not carrying out proper research
There are many digital business loan options available, all with different interest rates and terms. Don’t just settle with the first lender you find. Shop around to find the best loan that meets your business’s needs.
Tip: After choosing a lender, also do research on them to make sure they don’t have a bad reputation.
Small businesses are already at a disadvantage when applying for loans. By avoiding these common mistakes when applying for digital loans, you’ll increase your chances of getting approved and receiving the necessary funding for your business. Always proceed with caution and do your research to ensure that you’re making the best decision for your business.
To apply for a Pivo Capital loan, download the app and sign up for an account here.