What to Expect When You Seek Your First Business Loan
From making the decision to searching for financeand then applying for a business loan, the process can be a daunting task. But with wisdom and foresight seeking your first business loan can be painless.
Here are a fewthings you need to know to get the best business loan.
1. Choose the Right Lender
It is advisable to choose a reputablelender for your business loan. Your choice should depend on the nature of your business and how quickly you need the funds. Online lenders may be a good choice when you need funds quickly, have nothing to offer as collateral, and not much of a business history.
2. Seek the Lowest Interest Rate
Compare the various business loans on offer in the market. Take the tenor and the interest calculation into account before choosing a loan. The longer the tenor, the lower are the EMIs.But,you will end up paying more interest. The shorter your tenor, the higher are the EMIs.But you pay lower interest. Choose the loan with the lowest amount of interest, be it at the flat rate or the reducing balance rate.
3. Secured or Unsecured Loan?
Secured loans are the loans for which some kind of guarantee needs to be mortgaged to a lending financial institution. While unsecured loan is offered to on the basis of your credit rating.Calculate the total interest and decide for what purpose you need the loan and choose accordingly.
4. Be Prepared to Answer Questions
Lenders will ask you various questions about your business plan, strategy, and how you plan to repay the loan. For instance, if you are opting for a secured loan, the lender may ask you the details of your collateral. It may ask you about your business plan, financial details, accounts receivable and payable, and the like. Be prepared to answer these questions.
5. Keep Your Documents Ready
A business loan needs a lot of documentation.So, keep all your papers in order. In addition to your identityand address proof, you may need to furnish personal and business tax returns, lease agreements, bank statements, and profit-and-loss statements, among others.
6. Be Patient
Lenders take a little more time to sanction business loans compared toother loans. The lender will check all documents to figure out if you can repay the loan. There may be delaysinthe verification process due to the number of documents. In some cases, the lender may askfor more information or clarifications. But once the loan is approved, the disbursal process is smooth.
The aim while seeking a business loan is that you get the best terms, in a fair and transparent way. With low interest rates and generously flexible repayment options, business loan by Bajaj Finserv can give you the much needed boost to your business, enhancing your competitiveness and profitability.