Business Loan Interest Rate
Being an entrepreneur can be very exciting! The satisfaction of creating a new business from scratch and seeing it grow is a unique experience, both exhilarating and frustrating in equal measure.
As always, money plays an important part in converting dreams into reality and a business loan is probably one of the most effective ways to fund your independent venture. However, it is not as simple as it sounds, as getting a business loan could take a long time and is a time-consuming process that involves extensive documentation.
Business owners, or those looking to start a business must not only demonstrate a solid business plan and show growth in business, possible setbacks, etc., but must also possess a good credit score, healthy credit profile and have collateral to offer.
What is a business loan?
A business loan is a way of raising funds to start a new business or expand an existing one. It is can be an unsecured or secured loan depending on the lender. The loan amount is meant only for business purposes and you should be able to show appropriate documents and receipts that the loan has been used towards business expenses.
The loan amount can vary with each lender and also depends on the borrower's eligibility. A new business might not be eligible for a substantial sum, as compared to an existing business that is doing great in terms of revenue.
Business Loan Interest Rates:
The interest rates on a business loan depend on a host of factors: the business's credit history, annual turnover, number of years in operation, revenue, profits and of course, the lender's polices among several other factors. The interest rates can vary anywhere from 11% to 20% per annum or more depending on the aforementioned factors.
How to apply for a business loan
- You can apply online at many lender websites for a loan to start your business or to fund your existing one.
- Alternatively, you can also ask to be contacted by a representative of the bank or NBFC for further details on the loans offered and to check your eligibility.
- You can approach your existing bank to see if they will offer any special terms on your loan.