8 Common Business Loan Mistakes You Should Avoid

March 26, 2018by Team CapitaWorld0


Borrowing money is one of the most critical decisions of the business, which have a very long-lasting impact on the organization. Before availing any type of business loan (Term Loan, Working Capital Loan etc) you must read below 8 common business which most entrepreneurs are making nowadays:

1. Weak Business Model

Having a well-written business plan increases your chances of approving a loan application. The business plan should have complete detail of business concept (products/services offered), target segment, goals, competitor analysis, unique selling proposition, team member details, marketing plan, revenue model and projected earnings.

2. Not Having Basic Knowledge of Finance

Every businessman should learn the basics of accounting to manage their financial records error-free. By regularly reviewing financial records, you will be able to make perfect forecasting of your business and develop a pro-active financial plan, which enables you to borrow wisely.

3. Over-Borrowing

Businessman tends to borrow more than required when lenders offer higher loan amount. At the time of repayment, they find it difficult to repay the amount. So, you should narrow down the funds you actually need.

4. Poor Repayment Habits

You must pay all your dues on time. Higher credit score usually gets better loan offers. You can check your credit score online before availing a business loan.

5. Think Beyond Collateral Security

Usually, lender insists on sufficient collateral before approving a business loan application. However, there are many products available in the market such as merchant cash advances, working capital loans, and business lines of credit, which can finance you venture without any collateral security.

6. Spend Money to Make Money

Generally, loans are taken for meeting finance shortages or handling the contingent expense. But the highly successful businessman uses funds for purchasing new technology, expanding to newer locations, hiring skillful people and so on.

7. Choosing the Correct Lender

Apart from traditional financial institutions (like Banks and NBFC), there are alternative options available such as crowdfunding angel investors, High Net Worth Individuals, P2P platforms etc. Compare all available schemes of lenders before arriving at any decision.

8. Ignoring Fine print

You must read all the terms and conditions carefully before signing any document or agreement. If you have any query, then you should ask questions to lenders about anything, which you have not fully understand.


We believe in the philosophy of your success is our success. At CapitaWorld, we help businessman to thrive & succeed. So, if you have any query related to Business Loan, you can dial our toll-free number or write to us at info@capitaworld.com

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