In today’s era, businesses are very important as they will improve the standard of living of people and also it will help in the economic growth. Generally, the business loans provides two Kinds of benefits to the general public. Firstly, it will provide quality goods to the public, and secondly, it generates a lot of employment opportunities which further leads to economic growth. As for the better development and growth of the business, businesses need capital and that need can only be accomplished by taking the business loans.
So, here a question arises What is a business loan?
What Is A Business Loan?
A business loan is an agreement between the owner of the business and financial institutions (banks) in which the banks pay the funds to the business for their various operations and the business pay back the funds to the bank at some rate of interest. So, a business loan not only helps to meet the immediate needs of the business but also lays a foundation for long-term success. But while applying for a business loan, there are various factors that are important to consider.
#FACTORS TO BE CONSIDER: following are the factors that should be considered while taking a business loan:
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Financial Institution Reputation:
There are various financial institutions that provide business loans but before applying to any financial institution, we must check the reputation of a particular financial institution. We can check the reputation of financial institutions on the below-written basis:
- Whether they are evaluating the credit score rightly or not.
- If you are applying online, then must check the physical location of the bank.
- Must go through the official Website of the financial institution once.
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Loan Type:
The business loan is further divided into various types like Working Capital Loan which helps to meet your operational expenses and Equipment finance aids by which you can purchase the plant & machinery. So, the business should decide the loan type according to their need to avail of the maximum benefit from that.
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Collateral:
Business loans offer both kinds of secured and unsecured. It totally depends upon your loan requirement and financial institution. The more the amount of loan, the more the bank needs security.
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Repayment terms:
Before taking the business loan, one must go through the repayment terms What is the EMI amount preferred by the financial institution? And Is there any flexibility in repayment terms or not? Because once you sign the agreement you can-not go or act beyond the limits of the repayment terms.
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Payment process:
Before signing out the business loan, the business must go through the payment process of the financial institution. It means that businesses should know that the bank prefers monthly or semi-monthly or quarterly payments in the context of the repayment of funds. So that, the business can manage their operational expenses according to that and save the necessary funds with them. If you want to education loan then click here and same process payment.
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Loan amount:
While applying for a business loan, not only the amount of the loan is to be considered but the business loan interest rate should also be given the same weightage. Because it is the interest rate that will totally change the amount of the loan at the time of repayment the loan.
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Interest rate:
The interest rate of the business loan varies from bank to bank and individual to individual. Most of the banks give a certain range of interest rates on their official website. The interest rate may also differ according to the credit record, income level of the applicant, and the loan amount.
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Loan fees:
At the time of repayment of a loan, not only loan amount and interest rate is considered but there are various other kinds of fees that are considered in your repayment funds and mostly the general public does not know about that fees. These fees include the Processing fee, Re-scheduling fees, and many more.
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Disbursement time:
While applying for a business loan, the business should know how much the bank takes time to disburse the amount of the loan after the loan gets sanctioned. Because sometimes, the business needs the loan amount immediately after applying in order to meet the expenses. Usually, the bank takes 24 hours to 2 days as a disbursement time after the sanction of the loan.
Customer Service:
Customer Service is very important because if the applicant faces any kind of problem and issue after the loan gets approved in any context like disbursement period, payment process, loan amount and interest rate, etc. So there should be support from the bank and the bank should guide the customer in order to eliminate all such problems Business Loans.
