The decision to opt for a business loan can be a little confusing because you need to check out many things before going for a business loan. Before taking a loan, one might check for every possible way to find out the appropriate details like Online EMI, calculator to check the interest as per tenure, visiting other websites for a fair comparison between loan providers, interest rates, and many more. This due persistence is a crucial part of the loan application process and helps understand the constraints and chances offered by different commercial loans.
Talking about business loans, let us look at the two types of business loans that you can avail of from the lenders and banks.
Two Types of Business Loans Available are:
- Secured Business Loans: These loans are generally given in place of assets from the borrower. Even if the business failed to pay the money back to the bank or any lenders, they could reject the money by selling the asset taken during the time of loan sanction. However, these kinds of loans become very difficult to get for start-ups and first-time loan seekers. Even if a new business manages to value an asset, taking a loan against it increases its risk.
- Unsecured Business Loans: These kinds of business loans are without any security as they don’t need any asset or security. In unsecured business loans, the risk is assumed by the lenders. However, these loans have slightly higher interest rates. Unsecured business loans are best conformed for small business owners who do not want to be involved in risking their assets. However, with a good credit score and financial statement, An business individual can get unsecured business loans at lower interest.
Another thing you should know before applying for a business loan is that you should understand your capital. Because applying for loans in excess amounts can lead to waste. The higher the amount, the greater the EMI’s and interest to be paid. The additional reason not to take an excessive amount of loan is that it will be an unnecessary strain on the company.
On the other hand, a business loan below the critical requirement is also destructive for your business. It will end up not meeting your business requirements, forcing you to borrow from private lenders at higher interest rates. You may also lose business opportunities if you cannot generate funding by the due date.
Second, if you lose repaying the cash in time, you might lose the actual purpose for which you took the loan.
Fulfilling the Basic Criteria
Before applying for a business loan, the vital thing you should keep in mind is how easily your company can avail of the loan for the actual purpose. Whenever you apply for a loan, your credit score records go to the civil department for scrutiny, and too much stubborn query can bring a downfall on your business loan application. Therefore, going for eligible loans is quite important because it will help you build your credit score and ensure a quick disbursal.
Right EMI Calculation
You need to have correct information about EMI calculations and repayment techniques. It has been seen in many cases that several startup companies end up taking easily payable business loans. Due to improper planning, they miss out on the actual dates and payments, which later adds more interest charges. Hence, one can use the Business loan EMI calculator to know the estimated value which is freely available on the lender’s website.
So, if you take a loan of Rs. 5 lakh, that can easily repay in 24 months, but doing bad planning and making the months shorter for the EMIs can lead you to miss your EMI payments because of the stretch your finances.
Selecting correct lenders
Applying for loans from a lender for business is very common, especially small business loans for entrepreneurs, but if you look for a modern financing institute can be a better idea because mostly the Non-lending financial companies offer several benefits and less processing fees.
Business Loan Processing Time
The processing time for any loans is time taking, especially when applying for a business loan. You might expect the amount as quickly it can reach out to you, but some lenders follow the old regime to process your application and approve your funds, which can be a turnaround for your business timing. However, selecting a lending partner who can approve your fund via bank transfers will save you time and money.
It takes time to grow a business, and taking loans is an important part of growing your business on time. Choosing the right lender is very important. Many online sites can help you compare and choose a suitable loan and give you detailed product information about it.