Do I even qualify for a loan?

do i qualify for a loan
Do I even qualify for a loan?

You have all these great ideas, plans and figures going through your mind…

You’ve researched all the lending companies and are confident that you’re in the right position to go full steam ahead with the application, but you haven’t even considered the one potential problem standing in the way of this plan coming to fruition - Do I even qualify?

The first thing to do when faced with this question is to check! Crazy I know, but you’re guaranteed to find the answer. In order to do this, you need to note a few things down on paper of your own.

If you’re applying for a loan for a current business, bear in mind that the lifetime of the business thus far is a pertinent factor. Any business younger than one-year-old might have difficulty getting approved for a loan, whereas businesses older than a year will have a higher success rate.

What's my current credit score?

The first step is to check your credit score. We all have one. We don’t all ready know what it is, but it’s there, deep in the binary of the money lending matrix! Not sure how to go about this? You can obtain one at no cost from a multitude of websites, a few, namely Transunion, ITC, Credit bureau, etc. Once you know your score, you’ll have the first check done for whether you qualify or not.

If you find that you have a good score you’re ready for the next step to determine whether you qualify. If you don’t, however, you can always consider other online methods where lenders make small business loans for those with bad credit.

Do I earn enough?

The next question to ask yourself is whether you make enough money to qualify for a loan. You might think you’re okay, however, lenders require a certain annual revenue bracket to be met in order to approve a business loan. Each lender will have different brackets, so it’s best to inquire with the lender of choice, or call and find out from the shortlist you’ve created.

Be sure to disclose all means of income as well, because they will consider all of this when going through the process or qualifying for a loan. Remember, if you’re self-employed, it can be more difficult to qualify for the loan you have your dream set on than that of the regularly employed individual that is applying for a loan for a side business. The number one way to go about this is to ensure that you have a watertight dossier of all your income, stipulating all that will count in your favour.

Can I afford this loan?

Once you’ve sailed through the first checks, it’s probably a wise idea to see whether you’re able to afford the monthly repayments! Makes sense? One of the ways you can self-determine if your income matches a loan qualifying percentage is to calculate your debt-to-income ratio. Take the total figure of all your monthly expenses and divide that by your gross monthly income. The percentage you get will be an indication of whether you’re in good stead for an approved loan. You basically want to have 36% or less once this little calculation is done. Banks or other lenders are happy with this ratio. Anything from 36% up to 42% starts creating cause for concern. Analyse your expenses and see where you can trim the fat, so to speak, because taking on any more will start to push you toward the deep end. DTI’s over the 42% mark won’t count in your favour, you will most likely be advised to minimise your debts before returning for a loan application. Do this before you get to the lender, as you don’t need them to have a poor impression of you in the first place with not having done your homework and expecting the best from a not so great scenario financially.

Should you want to repay your loan with no difficulties along the way, take a look at your income and see whether it is at least 1.25 times more than your debts, all including the monthly loan repayment. If that is the case, then you know that your debt-to-income ratio should present a favourable percentage as per the previous step, but this will certainly provide solid affirmation that you are ready to apply for your loan and that you do indeed qualify!

Popular & reliable direct lenders offering Short-term loans

  1. FinChoice Short-term loan


    • Loans up to R40,000
    • Term up to 24 months
    • Interest from 24%
  2. MPOWA Finance Short-term loan

    MPOWA Finance

    • Loans up to R8,000
    • Term up to 12 months
    • Interest up to 36%
  3. RCS Loans Short-term loan

    RCS Loans

    • Loans up to R250,000
    • Term up to 60 months
    • Interest from 15%
  4. Wonga Short-term loan


    • Loans up to R4,000
    • Term up to 3 months
    • Flexible interest rates