When you are starting a new business or planning to expand the current one, eventually you are going to need capital. Getting a Business Loan in India is easy since banks and online digital lenders offer it. However, the real thing is, have you analysed your situation?
To analyse the situation, you should ask some essential question. Asking these questions before borrowing the money could help to clear a lot of unnecessary clutter. Whether you need business loan in Delhi or Bangalore, these queries will help you.
Do you even need the business loan?
There is no doubt that to grow a business loan is considered as a valuable asset. However ,it may not be an ideal approach. You should explore other options before trying out this one. Ask a friend if he or she is willing to help you out. The business loan should be the last resort after you run out of other options.
An angel investor could help you to the straight funding or may be the business partner would be willing to offer some capital to give you a boost. In short, do explore options before locking on a loan and if you have to take a loan, explore, HDFC Business Loan, LendingKart Business Loan or TATA Capital Business Loan.
What kind of loan do you need?
After you have decided to take a loan , the next important thing is to choose what kind of loan? For example there are two types of loan personal loan and business loan. The benefit that they both provide is that, both do not require a collateral, security or a co-guarantor unless it is necessary and both are quickly available.
A lot of time people take a personal loan to use the funds in business because it has low interest rate. However, it only happens, when you have a robust credit profile. You could also explore line of credit. Here are different types of business loan in India you could get.
- Term loan
- Start –up loan
- Working capital loan
- Loan against property for SME
- Equipment financing
- Invoice financing
- Overdraft business loan
- Business loan for Women
- Business credit card
- Line of credit
- Merchant cash advance
What is your credit history?
When you apply for a loan, the lender first checks your credit history. Is it spotless? How your company score has performed. The credit history will play an essential role in determining the loan application getting rejected or accepted. It will also affect the rate of interest On which you will receive the loan.
You must be wondering why you need to give so much importance to the credit history? The answer is, lenders do not ask for collateral, so, for them, the risk is more. To assess the borrower capability, they have to rely on the credit history.
What if you need to offer collateral?
Let’s face it. Not every borrower’s credit history or CIBIL score is going to be spotless. To provide confidence to a lender, you might offer collateral or a trustworthy guarantor. If you can offer a collateral, it’s good. If you can not then move on to the next lender. And even if you get the loan at a high business loan interest rate, will you be able to pay it?
Which lender you should choose?
This is perhaps the biggest dilemma you will face. Every lender will claim to offer the best deal in the market. It is up to you to choose the best one as per your need and ability.
The conclusion
Hope these question will help you in taking a good decision. One last thing, Always read the loan agreement papers carefully before you sign on.
