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Often Business owners seek for Business loans to meet rising working capital requirements and expand the business. Various Banks & Financial Institutions flexible short-term loans and long-term loans as per the Flexi-loan limit of the entity. Banks and FIs are keen on understanding one’s financial position to culminate one’s ability to repay the loan.
• Requirement- Line of credit to meet working capital needs Ideal Loan Products- Loan through bill discounting, loan against stocks, and overdraft services etc
• Requirement- Unsecured business loan for short term needs Ideal Loan Products- Unsecured business loan with repayment option of less than 48 months
• Requirement- Business loan for long term needs Ideal Loan Products- Secured business loan against property
• Requirement- Business loan on ITR Ideal Loan Products- Such Banks consider and evaluate the ITR in order to assess the profitability of the business unit and the savings and investments portfolio. Most lenders seek a minimum ITR of two years. However, some lenders even lend business loans with a minimum ITR of one year. They are Landingkart, PNB, Allahabad Bank, Andhra Bank, RBL Bank Note: Above mentioned loan products are mere suggestions, reader(s) must use their own discretion before selecting business loans for their needs
Needs- One must understand one's company's present and future needs before seeking a business loan.
Risks- One must recognize potential risks that are related to one's business, both internal and external. Before making an offer, Banks and FI’s scrutinize one’s strategy to mitigate risks.
Elements- One must examine all crucial financial elements to determine which are indisputable and which can be readily renegotiated.
Limit existing EMI- One should keep their present monthly EMIs at no more than 30% of their income. Having lesser outstanding loans will improve one's negotiating position.
Compare- After carefully choosing a loan product, one must select a lender that offers credits in one’s industry.
T&C- One must thoroughly read the loan agreement and check all the terms and conditions.
Know complex terms- One must have an understanding of technical loan terms like inflatable installment, default, monetary pledges, advance-to-esteem proportion, and individual assurance.
Maintain- CIBIL score, annual revenue, and earnings of a business
Know loan limit- Applying for a loan less than the maximum loan amount could result in lower interest rates
Payment terms - Ask the lender for better payment terms.
Repayment conditions - Understand the terms and conditions for repayment as well as any penalties for late payments. Compare these across various lenders in the market.
Insolvency or project failure - Try to work out a deal with the lender and minimize the use of one's own assets as security for the loan if any unfortunate incident occurs.
Additional charges- included as documentation costs, processing fees, stamp duty charges, etc. Leverage credit history and financial position to negotiate on these charges
Prepayment Penalties - Ask about them in advance, compare across banks and negotiate with the lender
Insolvency or project failure - Try to work out a deal with the lender and minimize the use of one's own assets as security for the loan if any unfortunate incident occurs.
Insolvency or project failure - Try to work out a deal with the lender and minimize the use of one's own assets as security for the loan if any unfortunate incident occurs.
Additional charges- included as documentation costs, processing fees, stamp duty charges, etc. Leverage credit history and financial position to negotiate on these charges
Prepayment Penalties- Ask about them in advance, compare across banks and negotiate with the lender
Collateral- It includes an exhaustive list of immovable assets, financial assets etc. Compare the level of collateral to be pledged by different banks and select the best fit.
