Business loan

Top Questions to Ask Before Taking a Business Loan – Jammu and Kashmir Latest News | Tourism

Raising funds for your business can be a daunting task if you are unclear about the various opportunities available in the market. As a business owner, you can arrange funds from private, public or through a financial institution. Although among various alternatives, the easiest way to obtain funds is to apply for a business loan. However, you must have a clear answer to some of the questions before applying for this loan.

Q.1. What factors do you consider when calculating the business loan interest rate?

This is the most important question you should ask your lender. The interest rate is usually determined by considering your credit history and income. But these are not the only factors. They also take into account your company’s age, financial situation, type of business and debt ratio. The preceding criteria provide financial institutions with information about your company’s finances. It also helps them understand how you can pay off your debts.

Q.2. Can I get a business loan online?

As a business owner, you may not have enough time to visit the lender for all of your small or large business needs. Plus, you also can’t wait days for your application to be processed or find out if you qualify for a loan or not. So, the only alternative you have here is the option to request an online Business loan. Before settling on any lender, be sure to ask this question. Do not forget that the need for financing in a company is not punctual; it’s recurring. Choosing a lender that lets you apply for a loan through a website or app puts money at your fingertips.

Q.3. Are there any other fees associated with business loans?

Yes, when approving a loan, the lender not only charges the interest rate but also many other fees. Here are some of the most common fees associated with business loans.

  • Processing fee: Financial institutions charge this fee to cover the administrative costs associated with processing your loan. With most financial institutions, the processing fee is non-refundable.
  • Entry fees: Financial institutions charge this fee if you want to prepay the entire outstanding amount of the business loan before the stipulated due date. The lender allows you to close the loan after successfully paying the EMIs for the first twelve months after disbursement. Most financial institutions charge 4% of outstanding debt as a foreclosure fee.
  • Loan rescheduling fees:

Business is an ever-changing environment. There is no guarantee that your profitability will remain the same as when you applied for the loan. As such, financial institutions will allow you to rearrange your repayment period to better suit your budget. However, such postponement is subject to a fee of Rs 5,000 plus GST for each postponement.

Some other fees include late fees, loan document fees, and standard stamp fees. Therefore, you should consider the Annual Percentage Rate (APR) instead of the business loan interest rate before settling on your ideal lender.

Q.4. What are the different types of loan products available in the business finance category?

Business loans are available from financial institutions in various forms. You can easily find a variety of products to meet the various needs of your business. Each of these products differs from the others in terms of repayment term, eligibility requirements, loan amount, and other loan-related terms and conditions. Some of the main business financing products are detailed below.

Commercial term loans are short-term loans with a maximum repayment period of 36 months. You can get up to Rs. 25 lakhs of funding. Moreover, the lender does not require any kind of collateral to sanction the funds.

  • Financing of medical equipment: This type of financing is adapted to the needs of doctors who run a clinic or a hospital. The loan enables you to purchase state-of-the-art healthcare machinery. You can use this loan to purchase a scanner, ultrasound machine, MRI and other medical equipment. medical equipment business loan interest the rate is available at only 11%. The maximum repayment period for this loan is seven years.
  • Working capital loans:

This type of loan allows businesses to meet their short-term needs or operational expenses. Funds are offered for the LTV of up to 80% of your company’s underlying assets and inventory. This loan can be contracted for a maximum period of three years, with an interest rate ranging from 11% to 14%.

Q.5. Do I need to provide collateral to qualify for an unsecured business loan?

You do not need to post collateral to get unsecured term loans. However, if you do not meet the lender’s eligibility requirements, you can post collateral to obtain funds on favorable terms.

To conclude:

If you have any other questions about business loans or business loan interest rates, please post them in the comment section.