6 Things You Need to Know About Business Loans

Vedant Shah, 32, had one of the most interesting startups in Mumbai. He was running an organic café in the city wherein he wanted to bring in a “revolution in what we consume”. Since the initial startup which was 7 years ago, Vedant has come a long way and has achieved considerable success. Now he wants to expand his scale of operation from Mumbai to Ahmedabad. He has all the essential resources required to make a move. However, he lacks capital of INR 15 Lakh to take his business to the next level. While seeking for help from his friends, one of his friends advised him about Business Loans. At first, he was reluctant, but once he contacted a financial institution, he did not think much as he liked what they had to offer.

However, it did not help Vedant’s case, and it landed him into a financial crunch. He incurred a loss of more than what he required in this valiant effort. But what went wrong for him? Why couldn’t he succeed even though he was backed up by finance?

It turns out that much of loss incurred by Vedant was due to his lack of research while choosing a lender. On his friends’ advice, he sure picked up the idea but did not utilise it properly. He should have carried out a deep research before taking steps.

Here are the 6 unavoidable things you need to know about business loans:

Loan Amount: A business loan amount is essential when it comes to borrowing. NBFCs such as Bajaj Finserv offer loan amount of up to INR 30 Lakh. For an entrepreneur and his enterprise, it is of prime importance that he gets the loan amount right. Do not ask for less, do not ask for more, simply ask for what is needed. A sound knowledge of loan amount is possible only when a person has a detailed plan for what he wants.

Rate of Interest: When deciding upon the business loan deal, you must consider the interest rate the most. Similar to other types of loans, Business Loan interest rate plays a crucial role in determining your repayment capabilities.

Line of Credit: A line of credit is a facility provided by NBFCs such as Bajaj Finserv. Herein a borrower is provided with a credit facility which allows him to borrow and deposit on a frequent basis. Also known as flexi line, it is most popular because of the flexibility it offers. When you avail a line of credit facility on your business loan, you do not have to pay the interest rate on the entire amount but just on the amount that you use.

Flexi Loans: Similar to the line of credit, a flexi loan offers you to pay the interest only on the amount that you borrow. Flexi loan helps to bring down the monthly instalment.

Collateral-free loans: A collateral-free loan as the name suggests does not require you to submit a collateral. For this reason, a collateral-free business loan helps to prevent you from putting your personal or business assets on the line.

Pre-approved offers: If you are an existing customer of Bajaj Finserv, you will be able to make the most out of the pre-approved offers. A decision to apply for such offers might also provide you with a top-up loan.

The points mentioned above should be considered if you are looking to take a business loan. These points will help you maximise the benefits.

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