Are you planning to apply for a Business Loan? Here are the 5 must ask questions before applying for a business loan.
What are the different categories of business loans available? What are the main factors that influence the interest rates on my business loan?
Secured and unsecured business loans are available to applicants. Working capital loans, equipment loans, lines of credit, term loans, and other sorts of business loans are available. The company's age, credit history, annual turnover, and collateral; these factors decide the interest rate on your business loan. Lenders expect your company to have been in operation for at least two years. Business loans ranging from Rs. 10,000 to Rs.1 crore are available to eligible candidates.
What is the minimum credit score requirement for a business loan?
For a business loan, a credit score of 700 or more is regarded ideal. Your business loan will have the lowest interest rates if your credit score is 700 or above. A business loan can be granted with a credit score of less than 700, but the interest rate and other loan terms will be undesirable.
What kind of annual revenue do lenders expect from me if I apply for a business loan?
The value of your company's turnover plays a big role in evaluating whether or not you qualify for a business loan. To process a company loan of Rs.10 lakhs, most lenders need an annual turnover of at least Rs.1.5–2 lakhs. The annual turnover requirement differs according to the loan amount.
What are the interest rates charged by banks? Is the interest rate on business loans in NBFCs higher than in banks?
Banks, whether public or private, charge better interest rates on business loans, with rates ranging from 6 to 24%. The interest rate charged by NBFCs for business loans is slightly greater than that charged by banks, ranging from 10% to 36%.
What kind of interest rates do online lending apps or instant loan apps offer for business loans?
These lenders' business rates are often higher because they offer unsecured loans immediately; their interest rates range from 12 to 48% per year.
Will providing collateral for my business loan result in a reduced interest rate?
Definitely. You can get a cheaper interest rate and a larger loan amount if you take out a secured business loan.