5 Things To Consider Before Getting A Business Loan

Getting a loan might be accessible in India, but the difficulty lies in finding a lender with the terms and conditions you are comfortable with. A business loan can be used to expand your business and maximise your profits. With many banks and lenders providing mortgages for the same, be sure you know your business loan eligibility and understand which factors might influence your business loan cost.

1. Interest Rate

This can be a deal-breaker for many as business loan (Click here) starts at 13%. When you are repaying the loan, you have to pay the interest and the principal amount too. The interest rate can vary from lender to lender, and you should find someone who has an interest rate that you will be able to afford. 

There are a few exclusive deals available to women and people from the agriculture sector where there is a 2% waiver on the interest rate. Be sure to enquire about any such reduced price of interest.

2. Loan Tenure

 

Longer the loan tenure is, the more interest you’ll be charged. It is best you formulate a repayment strategy even before you approach someone for a loan.

3. Repayment Flexibility

 

How you will repay the loan and how flexible or rigid the terms can be is the deciding factor in choosing a lender. Some banks offer the flexibility of just paying interest during the initial months, which can help you immensely if you are a small business.

4. Collateral

 

A collateral-free loan is the best way to go if you don’t want to risk any asset. If that is not the case, then it is best to put up an asset that, if you default, won’t affect the functioning of the business.

Must Read: Small Business Loan vs. Cash Advance: Which one is Best?