How Much Does Business Loan Cost You?
If you are a business owner living India, you are fortunate enough to gain easy accesses to funds for the development of the business. There are a number of banks with a dedicated team to help the business owner avail the required business loan for the development of the business. Though getting a commercial loan is easy, finding a right lender is challenging with numerous options available. Before you make a commitment with the lender, you should know about different aspects like interest rate, processing fee, loan terms, loan amount and much more. All this can be alternatively termed as knowing the cost of business finance.
Apart from the interest rate comparison, you should consider many other factors to know what a loan for business will cost you.
One should be very cautious in choosing the loan term because longer the loan term, higher will be overall interest rate you pay to the lender. Prefer to go with the short loan term unless monthly EMI puts a pressure on your monthly cash flows.
Loan for the business is taken for various reasons like equipment purchase, an extension of the business location, working capital needs and much more. When you apply for the loan, make sure the lender finances 80%-90% of your project need, if the loan amount sanctioned by the lender does not suffice your need, addressing the need with the help of small loan will strain your cash flows. Approach different lender after a good research on the loan comparison sites like logintoloans.com to associate with the right lender.
When you are with the motive of considering the total cost of the business, you should discuss with the lender to know if there are any hidden cost involved in the loan for business.
Income in the business are never stable, it is important to discuss if the lender offers any repayment flexibility during a cash crunch. Some banks offer the flexibility of suspending principal repayment temporarily and ask you to pay only interest rate during the crisis. When there are surplus funds business owners also look at prepayment of the loan without any charges. The earlier scenario would ease cash flows and the later one would save interest paid to the borrower so, it is important to consider these factors when you calculate the cost of a commercial loan.
Business loans are both secured and unsecured in nature. Secured loans always have lower interest rate whereas unsecured loans have high interest rates. However, you should compare the costs and make a decision accordingly.
When you avail a business loan, you should bare some mandatory fee like processing fee. Some banks do offer a business loan with zero processing fee to attract customers. Do your research find such offers and cut down the cost of a business loan.