Entrepreneurs often consider taking a business loan to keep their company competitive and innovative in the market. Mainly, it is essential to raise funds while establishing a start-up. Several other reasons come into the picture when one tends to apply for a business loan, such as:
• Investing in further expansion of the existing business is probably one of the most obvious reasons.
• Many business owners go for this external source of funding from lending institutions to maintain substantial working capital.
• A business loan also facilitates to restructure a company’s debts by consolidating those under one umbrella.
• It also aids in getting the acquisition of equipment to provide a better business experience.
Therefore, borrowers seek such loans to prepare a small business for growth considering multiple factors.
However, it is essential to calculate the interest rate beforehand to get an idea of future payments. Moreover, debtors can also get a business loan with the lowest interest rate by considering the few tips mentioned below:
• Have a good credit score
Good credit score vouches for the credibility of the borrowers. Thus, lenders prefer applicants having a credit score of 750 or above. It depicts an applicant’s past credit repayment capability within due time.
So, start building a sound credit history if you still don’t have one. Financial institutions offer a business loan with the lowest interest rate to borrowers having a good credit report.
• Opt for a higher loan amount
The loan amount is the other factor for getting the best interest rate. Lenders usually levy a lower interest rate on a higher loan amount. Develop your business and be a successful business owner by solving all the financing problems with substantial capital and paying less rate of interest.
Leading NBFCs of India can even offer business finance ranging up to Rs. 30 Lakh.
• Take account of the loan term
The term of the loan also helps in determining the interest rate on the business loan. Generally, these loans are given at a tenure ranging from 1 to 5 years.
According to the conventional norm, a higher tenure will come with a lower interest rate. So, plan accordingly and decide repayment tenure to get the business loan with the lowest interest rate.
• Nature of the business
Depending on the type of business, NBFCs offer an affordable interest rate on business loans. For instance, they offer a lower interest rate on a business having a better annual turnover than a start-up. A new business holds more risk on loan default; hence, the rate of interest can be a little higher.
• Showcase a substantial business vintage
An enterprise, apart from having a healthy profit, also needs to possess a business vintage of at least 3 years. Longer the vintage, more will be the repayment capability of a business. It gives you an opportunity to negotiate the rate of interest with a lender.
• Opt for a Flexi Loan facility
It’s a new-age solution that allows the debtors to withdraw only the required amount from the sanctioned credit limit. Here, he/she needs to pay interest only on the utilised sum instead of the principal amount. Moreover, no interest rate will be charged if the debtors repay the amount within 24 hours.
In addition to these tips, sharing a cordial relation with the lending institution also assists in getting a business loan lowest interest rate.
Compare various lenders based on the points mentioned above before you apply for a business loan. Leading NBFCs like Bajaj Finserv offer their customers competitive interest rates. This customised scheme is indeed a time-saving process. You can check out your pre-approved offer by filling up only some of the necessary details on their website.
Therefore, avail a business loan coming with an affordable interest rate as an efficient form of investment.