SMEs no longer rely on banks loans for their business. Banks are infamous for lengthy loan procedures, heavy paperwork, and not approving loan requests of small business owners.
Therefore, they choose the alternate business loan provider in the form of an NFBC. They offer quick loans and have an easy procedure to apply for a small business loan.
NBFCs offer instant business loans at flexible terms and simple application. They are becoming a popular option of the business lender for unsecured business loans as well.
With a large number of NBFCs operating in the market, it can be difficult for you to choose the right business loan provider and which one to trust.
Before starting the loan application process, it is essential to shop for the best business loan that fits all your needs.
All the NBFCs in the market have different interest rates. Keeping in mind the business loan application, your credit score plays a vital role. So, the loan application is the last step, and it is imperative that you first compare the loan lenders to seek all the necessary information.
You can choose the right business lender through the below-mentioned criteria:
Compare Business Loan Rates
Business loan interest rates are the first most consideration of most borrowers. They want to know the cost of availing the loan for a business. You also should consider the cost of availing the loan.
However, ensure that you dont just count the interest rate but other costs associated with the business loan. Such as processing charges, prepayment charges, etc.
You also should know that your credit score affects interest rates, i.e. if your score is low, the rates would be higher and vice versa.
Depending on your requirements, you may need a big or small amount of business loan. Before choosing the lender, know the substantial loan amount that you require to cover your expenses.
You need to pick a loan business lender that offers flexibility. Some lenders offer loans ranging from Rs. 1 lakh to Rs. 5 lakhs to help business owners meet their small business requirements.
You must avail a business loan that can meet all your loan requirements. If you avail a loan lesser than what you require, you wont be able to meet your expenses. However, if you avail a loan more than your requirements, you would only be bearing extra interest cost.
Read the Contract
Every right loan provider will ask you to sign a legal document dictating the terms and conditions for a business loan.
So, it is essential that you read the fine print of the contract to understand all your obligation. Make sure that you know all the terms and conditions that you are agreeing on.
You can always call out for clarity if you dont understand anything in the business loan contract. Understand, that the agreement is legal, and not obeying it may lead to you legal battle.
It is evident that if you get any surplus income in future, you will use it to repay your loan before its tenure to relieve yourself from credit responsibility. This will also save you from the interest cost. Nevertheless, some lenders have stringent rules for it, and they levy the prepayment penalty as well.
However, there are numerous lenders who dont levy any prepayment charges at all. So, find out this and ensure that you grab the best deal. Notably, it will also help you clear the loan responsibility quickly and save you interest expenses as well.
Loan Application Procedure
The significance of this point is that the procedure should be quick and straightforward. You should be able to apply for a small business loan without any hassle and at minimal documentation. Also, some lenders even have business loan App that allows you to apply for a loan online quickly.
The points mentioned above are clear and straightforward points that will assist you in zeroing in on the best business loan provider.
The critical point here is that you should consider all the aspects while finalising the business lender and ensure that you choose the business lender that not only offers loans at the low-interest rate but through the trouble-free procedure as well.