Msme Owners: What Should You Fix Before Applying For A Business Loan?

By Author: Jaymin
Total Articles: 3
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If you run a small business, you may have faced this situation: customer orders are coming in, but payments are delayed. You need money for stock, salaries, or supplier bills, and applying for a business loan starts to feel urgent.

Before submitting the application, it is worth checking whether your cash flow and financial records are in order.

Here are a few practical things to review.

1. Know your monthly cash position

Don't rely only on sales figures. Look at the money that actually reaches your bank account.

Review the last six to twelve months and list your customer receipts, supplier payments, salaries, rent, taxes and existing EMIs. This will help you identify months when your business regularly runs short of cash.

2. Find out which customers are paying late

Make a list of unpaid invoices and their due dates. If certain customers regularly take longer to pay, account for those delays when planning purchases and expenses.

For eligible invoices involving participating buyers, TReDS may be worth exploring as an invoice-financing option.

3. Keep business and personal ...
... transactions separate

If client payments, family transfers and household expenses all appear in the same account, it becomes harder to understand your actual business income.

A separate business account and organised records can make your financial position clearer.

4. Check your GST records and bank statements

Make sure applicable GST returns are filed and your business records are updated. Review differences between reported turnover and bank credits rather than assuming every deposit is revenue.

Keep invoices and other supporting documents available if a transaction needs explaining.

5. Review your credit report

Check your existing loans, repayment history and any errors in the information reported to the credit bureau. Pay EMIs on time and avoid taking on additional debt without a repayment plan.

6. Don't borrow more than you need

Work out the amount required and how the funds will help your business. Calculate the expected EMI and check whether your normal monthly cash flow can support it, including during slower periods.

Where can you explore business financing?

You can visit PSB Loans in 59 Minutes to learn about business financing options.

The detailed guide is available here: How MSMEs Can Fix Cash Flow Problems Before Business Loan Application.

For other MSME owners: What causes the biggest cash flow challenge in your business — delayed customer payments, inventory costs or seasonal demand?