Business loans are the catalyst for any business development. Even establishes business firms face financial drop and need external funding. The government of India has established many facilities to finance small businesses in order to maintain liquidity in business development. All conventional banks and many Non-Banking Financial Companies (NBFCs) offer business loans with a fixed tenor and varying interest rate. The business loan interest rate can alter due to many reasons. Therefore it is important to choose your business loan wisely.
Factors Impacting Business Loan Interest Rate
Business loans are collateral-free/unsecured loans. Due to this, the business loan eligibility criteria is the creditworthiness of the company and their ability to repay the loan amount.
Type and Size of Business
Some businesses are riskier in terms of establishment, development, and financing. And some businesses can maintain stable growth. Financial providers offer business loan to businesses that are stable enough to return the loan amount. Usually, loan providers reject loan applications from companies that may shut down any time. Lenders offer lower business loan interest rate to long-term established companies compared to the new ones. Similarly, the type of business will determine your ability to build more revenue.
Business Plan
Lenders look into the purpose you wish to use the business loan. Although you need not to mention the exact purpose of the amount, you might need to build a layer of trust with your lender to ensure productivity. If you provide a clear business plan, your loan provider will get an assurance that your company will expand and grow efficiently with business loan financing.
Business Vintage
Loan providers consider the business vintage of your company before offering the loan. Prominent lenders offer a range of loan products to companies with a minimum vintage period of 3 years. The more the experience of business, lower will be the interest rate and higher will be the loan amount.
Loan Amount
When you are clear with the amount of loan you need for business development or expansion, the loan provider will let you know the interest rate applied to it. This interest rate is highly dependent on the loan amount. Higher the loan amount, lesser will be the interest rate. We offers a business loan up to Rs 30 lakh to cater all your business requirement efficiently. Pre-approved offers by the company further make the process of availing finance easy and quick. You can check your pre-approved offer and get instant approval on your loan.
Loan Tenor
Business loan tenor ranges from 1 year to 5 years. Additionally, if you choose the interest-only flexible loan facility, you can select a tenor up to 8 years for convenient loan repayment. When you apply for a loan with longer tenor, the lender rewards you for the trust you build with them with lower interest rates.
Annual Revenue
Loan providers offer business loans with a lower interest rate if your company has got higher annual revenue. Similarly, the business loan interest rate will increase with the decrease in your annual revenue value.
CIBIL Score
The primary factor of a business loan eligibility is the CIBIL score. A credit/CIBIL score is a 3-digit value representing your credit history. The credit score can range from 300 to 900. Higher the score is, lower will be the interest rate applied on your business loan. You can sustain a good credit score by paying off your credit card bills and loan EMIs on time.
How to Calculate the Business Loan Interest Rate?
With quick and easy online business loan application procedure, you can calculate the exact rate of interest that will be applicable to your loan amount using the Business Loan EMI Calculator. Also, you can check your business loan eligibility and another loan related information from website. The processing fee applied and other charges are transparent to every loan applicant.
