A Business Loan helps meet monetary shortfalls that need immediate attention. These days, SME loans are instantly available online without any collateral requirement. However, the interest rates vary depending on the NBFC or lending institution’s policy and the applicant’s eligibility. Loan providers determine an applicant’s business loan interest rate based on the business vintage, performance, profits, annual turnover, etc. Trending Update News
After checking the NBFC’s eligibility conditions and documentation requirements, use the tips mentioned here to assess the interest rates and get the best deal.
- Compare Different Lenders’ Interest Rates
Business Loan interest rates broadly vary between lending institutions, depending on the business vintage, loan amount, financial obligations, and other eligibility conditions. Different lending institutions also have different policies and criteria to determine interest rates. Thus, with the same eligibility, an applicant may get varying interest rates from various loan providers. So, browse through major NBFCs’ online portals and compare their interest rates to make an informed decision.
- Reduce Financial Obligations
The current loans and other financial obligations play a significant role in determining business loan interest rate. Before approving the loan, financial institutions check the business history and the business owner’s debt-to-income (DTI) ratio. Businesses already indebted heavily are high-risk borrowers with higher chances of loan default. Consequently, the NBFCs reject their loan applications or charge them a higher interest rate. Therefore, check your DTI ratio and reduce financial obligations before assessing the new loan interest rate.
- Maintain a Decent Credit Score
Build a decent credit score by paying the existing loans or debt on time. Clearing current obligations before the due date also helps improve the credit score. Never apply for multiple loans at a time, as it significantly affects the credit score and attracts higher interest rates. Retaining old accounts, minimising credit card usage, and diversifying the credit portfolio with different loan types also improve the credit score. Experienced business owners with a CMR of 6 and credit score of 700+ will be entitled to the best interest rates on their loan applications.
- Calculate EMIs for Different Loan Plans
A business loan EMI calculator helps calculate the equated monthly instalment (EMI) amount for different loan terms. The longer the repayment tenure, the higher the interest cost. Therefore, the online tool helps significantly assess the interest rate and make better decisions. Moreover, it estimates the EMI amount, allowing the business owner to plan the repayment accordingly.
Next time you need a Business Loan, you can follow the tips mentioned in this article to get the best loan deal. Remember to check your eligibility and use the Business Loan calculator to calculate the EMIs of the required loan amount before applying. Global Top Trend