Every small business organization needs the help of financing options at one point or the other. While you want to navigate the maze of the type of lenders and the type of loan, things can get complicated. It is pretty challenging for these business organizations to choose the right lender and small business loan in India.
Moreover, every business owner needs to evaluate their loan options before applying for one. Here are the 7 most important questions that every business organization should ask before getting the funds.
What is the purpose of this extra capital?
Most of the borrowers often overlook the reason for getting the extra capital for business. If you consider taking this additional capital, the company must identify whether it needs it to fill the long-term need or the short-term gap. It also helps the borrower to evaluate the payment scale.
How is my credit profile?
A credit profile would make a difference in the kind of loan that you get. Every lender would consider giving a loan to a business organization that has a good credit profile. Although it is not the mark to measure how the business organization meets various applications, the lender would review the score while evaluating the application for a small business loan in India.
Does the lender offer long-term loans that fit the business need?
It is an important question that every business should consider. Once you identify the purpose of your business loan, you can find the type of lenders that offer you the loan that can fit your business.
What are the total cost and interest rates of the loan?
The total cost and the business loan interest rate depend on the lender and the type of loan you take. Make sure that you use the APR calculation, including all the fees.
How to make periodic payments?
Some of the lenders accept paper cheques, while others process automatic debits with the help of ACH withdrawal from any business bank account. It is one common practice that most business owners indulge in. Moreover, the business organization should make each payment promptly. This practice can provide a strong credit profile to the business. Along with that, if you consider paying your loan amount with the help of ACH payment, then it can save all your money. But make sure that you know the debited amount.
What is the process of application?
Depending on the lender that you choose for your loan, the application process may take somewhere between a day to several weeks or months. For instance, if you opt for a loan from any banking institution, it generally takes a week to go through. But if you consider an online lender, you may quickly get the loan within a few business days. Therefore, depending upon the purpose of taking your loan and how promptly you would like to have the capital, you need to reach various lenders. Sometimes the lenders may provide loans as quickly as within a few hours.
Does the lender report the credit history of the business to the business credit bureaus?
It is good to ask your lender whether they report your credit history to the credit bureaus or not. If they do not do it, then it will be in vain on your part to build a more robust credit profile. There are specific lenders, including the merchant cash providers, who do not indulge in this practice. Hence, before taking the business loan, make sure you do the proper interview with your loan provider.
Once you consider all these aspects regarding business loan interest rate and small business loan in India, you can avoid many loan-related problems and understand your situations better.
Leading financial institutions like Bajaj Finserv offers high-value unsecured business loans with minimal documents and easy eligibility. This NBFC also provides pre-approved loan offers on its multiple financial products such as business loans, personal loans, home loans, etc.