Table of Contents
- Introduction
- Business loan: Who can benefit from it?
- How to choose the right business loan?
- Identify the use of loan
- Be aware of the processing time
- Research the application process
- Efficient customer service
- Competitive interest rates
- Flexible repayment schedules
- Lender's reputation
- Reviewing personal credit score
- Final thoughts
Introduction
Liquidity is one of the most important criteria for every business. Businesses constantly experience both high and low patches. Any enterprise is in constant need of funds, be it during the low times or for expansion purposes,. Additionally, the Covid-19 pandemic has shown that ensuring the availability of working capital is crucial for businesses and availing a business loan can help.
At present there are multiple business loans available in the market. So, how can people decide which one is best suited for them? In this article, before we discuss how to choose the best business loan, let's understand who can benefit from it
Business loan: Who can benefit from it?
As the name suggests, business loans are loans given to business owners by lenders, including financial institutions. These can be used as short-term finance and also for achieving long-term goals. Loans are investments into business growth. A reason for its popularity is that, not only does the company receive funds for its operations, but it also retains control and equity. Moreover, with a competitive market, lenders offer flexible repayment schedules as well as attractive interest rates. One such example in the financial market is Shriram Finance business loan interest rate.
Today, there are business loans available to cater to every individual's needs, including women entrepreneurs. Following are some of the ways a business loan can be a great support instead of being just a debt:
- When individuals opt for business loans, they don’t share their profits with lenders. They are also not required to mortgage collateral. The borrowers can use the profits to finance their dreams. Business loans support working capital requirements as well as individual needs, such as vehicles, homes or vacations.
- The hassle-free disbursement process is another advantage. If the business needs urgent funds, they do not have to halt their operations.
- A business loan, if repaid on time, can also be an option for improving the credit rating of the business, thus allowing it to benefit from attractive future interest rates.
How to choose the right business loan?
There are numerous offers of business loans available in the market. Business owners need to do thorough research before choosing the one that best suits their needs. Considering the following factors will help you choose the best business loan:
1. Identify the use of loan:
Every borrower needs to understand why they need a business loan in the first place. For what purpose is it required? Can the company afford debt? The answers to these questions will determine the amount of the loan the borrower wishes to apply for and, subsequently, the interest rate and repayment schedules. Loans for smaller amounts are usually approved more quickly.
2. Be aware of the processing time:
After understanding the purpose of the loan, it is important to determine when the funds are needed. Is it short-term finance or otherwise? Before selecting a lender, learn about their approval process and the time it takes for them to disburse the loan. Some lenders may even provide the option of electronically disbursing the loan amount.
3. Research the application process:
Obtaining a business loan begins with completing an application form. The last thing anyone wants is the hassle of endless layers of documentation and approvals. Nowadays, many companies offer stress-free business loan application processes. Shriram Finance business loaneven ensures that right from the application to the disbursal, everything is done online in easy and quick steps. In short, it's hassle-free.
4. Efficient customer service:
A borrower may have many doubts and questions regarding the repayment schedule, account information, or interest rates when taking out a loan. At these times, an efficient customer service helpline is invaluable. Many companies today offer 24/7 customer service online or have a toll-free number. This enhances the borrower's trust in the company. The reputation of a lender is positively affected by the quality of its customer service.
5. Competitive interest rates:
The interest rate of a loan amount depends on several factors including the amount of the loan and the borrower's creditworthiness. The interest rate reflects the amount of risk associated with the borrower. The higher the risk, the higher the interest rate. However, with so many business loans in the market, companies today offer very attractive rates if the eligibility criteria are met. Shriram Finance Business loan interest rates are among such examples in the financial markets.
6. Flexible repayment schedules:
Every business owner should ask themselves this question before taking on debt: how does the company intend to repay it? This requires businesses to analyze their financial statements as well as any prior debt commitments. Once this is done, they must devise a plan showing how the loan will be repaid. Having this information will be helpful when they apply for a business loan. Most lenders, like Shriram Finance business loans, offer flexible repayment schedules based on the borrower's needs.
7. Lender's reputation:
The reputation of the lending institution is very relevant while sifting through business loan options in the market. When it comes to the disbursal of funds and understanding how considerate they are toward their customers, the reputations of institutions play a significant role. It is also possible to know this from customer reviews.
Additionally, researching about different lenders is always beneficial. Some non-banking financial institutions like Shriram Finance business loans, for instance, offer better interest rates and easier business renewal than most banks.
8. Reviewing personal credit score:
Creditworthiness is a measure of the borrower's financial soundness. A high credit score means a faster loan approval with favourable terms. No one has a better understanding of borrowers’ creditworthiness, other than the borrower himself. It is important to declare all liabilities and prior debts before applying for a business loan.
The current revenue must also be assessed so that there is no default in repayment and consequently no harm to the credit score. If the borrower's credit score is not good, he should work on improving it first before applying for a business loan, otherwise he may not receive favourable interest rates and loan terms.
Final thoughts
Apart from the above-mentioned ways to choose an optimal business loan, borrowers should also furnish all the important documents while applying for a loan. Almost all lenders mention the document requirements on their websites.
Furthermore, borrowers can check their eligibility for loans online. Shriram Finance Business Loan, for example, offers the facility of applying online for gold loan, two-wheeler loan and business loans. The borrower can also check their eligibility along with the interest rates after submitting an online business loan application.
