Tips To Get A Low-Interest Rate Business Loan
The interest rate on a business loan will save your business time and money. Follow these 7 tips of getting a low interest rate on business loan.
Businesses of any size can benefit from business loans, whether they need to expand, buy equipment, hire new employees, acquire working capital, or purchase inventory. However, a loan for your business comes at a cost–the interest rate the lender charges.Obtaining a loan with a lower interest rate will not only save your business time and money, but it will also assist in repaying the debt sooner. How do you accomplish this? These tips will help you get low-rate business loans.
How To Get A Low-Interest Business Loan?
1. Increase Your Credit ScoreObtaining an unsecured business loan requires lenders to consider several factors, including credit score. A credit score of 700 or higher is essential to get low-interest small business loans.
2. Don’t Default Your EMIAn EMI is a standardized monthly deduction towards your loan. Repaying your prior loans without defaulting on your EMI increases your chances of getting a lower interest rate from your bank. Banks will favour you if you maintain a strong repayment history.
3. Design A Good Business PlanDraft a good business plan to get a loan approved quickly. The key to getting a low-interest business loan is to make a good impression on the lender. Ensure the business plan clearly explains the company's goals, priorities, and strategies.
4. Improve Your Business FinancialsThe company's financial position, upcoming projects, and turnover are all factors that can help you get lower interest rates from banks. In other words, improving your financial statements will result in lower interest rates.
5. Research And RefinancingYou can often find lower interest rates from competitive lenders than you would get from your current lender. A balance transfer of the loan is an option here, which means the second lender repays your existing loan and offers you a business loan with a reduced interest rate to pay off the balance.
6. Offer Collateral To Secure The LoanYou can also reduce your interest rate by providing collateral to secure the loan, which may help your bank reduce its risk of lending. The loan can be cheaper if you pledge tangible assets as security.
7. Build A Relationship With Your LenderCustomers with a long history with the lender and excellent repayment history will be looked upon favourably by the bank. As a result, you can get a loan with a lower interest rate. Making loan payments on time, delivering documents as requested, and being transparent about business activities are all critical to establishing a good working relationship.
Get A Business Loan With IIFL FinanceAcquire much-needed finance for your business's advertising, marketing, infrastructure, machinery, plants, operations, and other vitals with a business loan. With IIFL Finance, one of India's leading financial institutions, you can avail of a business loan to finance your company’s capital needs.
Get approved in less than 30 minutes by filling out our online application form, uploading your bank statements, and submitting your KYC documents.
Frequently Asked Questions
Q1. Are small business loans secured with assets?
Ans. If you meet the business loan eligibility criteria, you don’t need to pledge any assets. However, if your credit score or history is poor, your lender might ask for collateral before approving a loan.
Q2. Which entities can avail of a business loan?
Ans. Businesses of all types, including individuals, manufacturers, partnerships, companies, retailers, sole proprietorships, etc., can apply for business loans.