Loans are the most suitable option to arrange finances for a variety of personal and business needs. People take loans for undergoing medical procedures, doing a home renovation, buying a property, starting a business, buying a car, funding the education of a child, and so on.
In India, loans have become increasingly popular, and an 11.90% year-on-year increase in the value of loans has taken place in two weeks, within May 2022. Loans can broadly be categorized into loans taken for personal reasons and business loans. Low-interest business loans have made it possible for innumerable people to become financially independent and provide employment to others through start-ups and the expansion of running businesses.
Businesses have to survive and thrive in the ever-changing business environment. There is always a need for funds to arrange for the working capital for a business and meet other expenses like buying machinery, paying salaries, etc. Low-interest business loans can help a business meet such expenses and function smoothly.
Benefits of a Business Loan
- Business loans offer tax benefits to business owners as the loan amount is exempted from tax under the Income Tax Act.
- Every department of a business needs funds. Business loans can help the Research and Development department to come up with better products, the Marketing and Sales team to advertise better and boost sales, the Human Resource team to hire skilled staff, and the Production team to increase quality production. All this can help businesses increase their scale of operations and earn higher revenues.
- Business loans are collateral-free and are easily available. Trusted lenders offer flexible business loan solutions to cover a variety of expenses for the business.
- Business loans provide a loan of up to Rs. 50 lakhs to business owners to support their business endeavors.
- Business loans have a flexible repayment tenure. Different lenders offer business loans for flexible periods between 12 to 60 months, with some schemes offering zero foreclosure charges on the business loan.
- Business loans have easy eligibility criteria and require very few documents for approval. Financial institutions provide business loans within 24 hours of the approval of the loan application.
6 Tips to Help you Save Business Loan Interest Rates
- Have a higher credit score: The credit score tells about the creditworthiness of the business owners. For a small-scale business, the business owners’ credit score defines the business’s creditworthiness. Therefore, business owners should try to increase their credit scores. A higher credit score will allow business entrepreneurs to get a lower interest rate on their business loans.
- Regular EMI payments: Business loans are repaid in EMIs. When a business owner pays regular EMIs, the lender usually reduces the interest rate on the loan as a token of acknowledgment for his repayment discipline. It is because the repayment track record of the business owner gives an assurance to the lender that he will comfortably recover the money he has lent.
- Improve the financial statements of the business: Lenders conduct detailed checks on the business before giving a loan. If a business has strong financial statements, a strong financial position, and a profitable business turnover, the lender offers a business loan at a low-interest rate.
- Refinancing a loan: Various financial institutions may be offering a business loan at a much lower interest rate than your financial institution. In this case, you can always transfer your loan and get it refinanced from another financial institution that offers lower interest rates on business loans.
- MSME business loans: The government promotes the growth of Micro Small Medium Enterprises and offers them financial help in the form of low-interest rate loans. If your business comes under the MSME category, you can take a low-interest loan on it and repay your current business loan.
- Business history: A business that has been in existence for a long time has higher credibility than a start-up. Therefore, lenders usually offer a lower interest rate on such businesses.
Apply with a trusted lender to get a fair deal on your business loan. Lenders offer business loans of up to Rs. 50 lakhs to business owners without asking for collateral. You can take a quick business loan with a tenure of up to 60 months.