All businesses require financial assistance for their efficient functioning. They cannot run on the strength of their capital alone. Quite often you see companies running short of cash at the most inopportune moment.
The universal solution to such an issue is to apply for a Business Loan from a bank or any other financial institution.
Choose the right lender
Selecting the perfect business lender is crucial to your business. Various factors go into choosing the right business lender. Some of these factors include the rate of interest, fees, transparency, repayment schedules, provision of collateral, loan type, tenure, and so on.
Let us look at 5 such factors that help you choose the right Business Loan lender.
1. The reputation of the lender
The reputation of the lender is a crucial factor. Select an established lender as they are knowledgeable about the current trends. They offer the best products at the most reasonable rates as well. Do your research online by taking the help of loan service providers like Transparency is an essential factor in business lending. Choose the lender having the perfect grasp of the situation. You can judge the positive approach of the lender from the way they offer Business Loans for new businesses.
2. Rates of Interest
Banks are very competitive as far as rates of interest are concerned. The nationalized banks in India have a more uniform interest rate structure as compared to the private banks and the non-banking financial companies. These banks follow a method of classifying business activities as coming under the priority or the non-priority sector. They offer attractive rates to the priority sector, and most of the businesses come under this sector. Such banks provide Business Loan for new activity covered by the Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE). You do not have to maintain any collateral for such loans. Secondly, the rates of interest are comparatively lower than similar loans offered by private banking institutions.
3. Different types of business loans
Choose the lender who offers a variety of business loan facilities. A business enterprise needs different kinds of Business Loans with varying repayment options. A long-term loan is perfect to construct factories, purchase machinery, and equipment. A short-term running account facility is right kind of investment for meeting recurring working capital requirements. Bills discounting or invoice factoring are two of the best methods to realize your receivables. A letter of credit facility is perfect for procuring raw materials. Your lender should be in a position to cater to all these different types of Business Loan facilities.
Transparency in the banking operations is crucial. A business enterprise should know the exact amount of fees payable by it as it helps in preparing the budget. Banks levy various charges on the facilities they offer. You should know the hidden costs before agreeing to use the facility.
This simple example will make things clear. One of the most popular Business Loans without collateral is the loan under CGTSME cover. People know that they have to pay a premium of 1.5% of the loan amount to avail the coverage. Not many know that you have to renew the coverage every year by paying a premium @ 0.75% of the loan amount. Therefore, over a 5-year period, you end up paying nearly 4.5% of the loan amount. In case your loan is for Rs. 100 Lakhs, you end up paying Rs. 4.5 Lakhs as CGTSME premium. The irony is that you will not be using the coverage as you make your repayments regularly. The CGTMSE cover is available only in case of default. Hence, transparency is a virtue.
5. Services offered by the lender
Today, you have the facility to Apply for a Business Loan Online. At the same time, you can check out the reviews before applying for the Business Loan. The after-sales service offered by the business lender is essential. Various factors such as responsiveness to the queries, communication, response time, and so on play a defining role in determining the quality of the after-sales services. Select the lender who offers the best in this regard. Any Business Loan is a long-term commitment. Such relationships require cooperation to succeed. Opt for the lender who has the maximum positive reviews. Consult other business enterprises in the industry before choosing the right business loan lender.
Choosing the right lender is just like choosing the right life partner. You need to play long innings. Selecting the perfect lending partner should not be difficult if you keep the points above in mind.
To apply online for Credit Cards, Secured Loans and Unsecured Loans, visit www.mymoneymantra.com, the leading online lending marketplace that offers financial products from 60+ Banks and NBFCs. We have served 2 million+ happy customers since 1989.
Talk to our Loan Specialists toll-free at 1800 103 4004 to know more about our products and offers