Friday, April 19, 2024

6 Ways to Lower Your Business Loan Interest Rate

Entrepreneurs, especially small business owners, have to manage everything in their business, from paying salaries, purchasing equipment and upgrading facilities to launching a new product or expanding their presence. Almost each of these things are backed by capital and funding. While many businesses may be profitable enough to manage their operations well, some businesses might need that extra funding to achieve their goals. . Instant Business Loans that empower you to manage finances efficiently without collateral bridge this financial gap.

What is a Business Loan?

A Business Loan is a crucial financial product in today’s world that enables business owners to keep their operations running smoothly even during a  financial crisis. You can start a new division, open a new branch, purchase advanced equipment, or use the funds disbursed as working capital.

While many small businesses borrow money from unorganised sources, smart entrepreneurs prefer to apply for online Business Loans from new-age NBFCs like Clix Capital. The reason is simple – Clix Capital offers unsecured Business Loans at lower interest rates than unorganized players, with minimum documentation and quicker approvals online.

The key is to apply for a Business Loan when you need funding for your business. When you apply for a loan online you must consider business loan interest rates smart tips are discussed below.

  • Boost Your Credit Score

Your credit score affects your Business Loan’s interest rate to a greater extent. When your business’s Experian credit score is 750 and above, you can secure a Business Loan at the best interest rates from Clix Capital. 

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If you’ve never taken out a loan before, you might want to start with a short-term loan before applying for a Business Loan. This can build your credit score, making you a creditworthy applicant for the loan provider. 

If you are a small business owner, the NBFC may consider your personal credit score to offer you a Business Loan. So, make sure you have a good credit score when you apply for a low-interest Business Loan online.

  • Credit History

Another important factor that lending institutions consider for a Business Loan is your credit history. Credit score and credit history are linked. Therefore, find out whether you have any past-due or defaulted loans in your name before you apply for a Business Loan. If so, pay them back right away. 

The lending institution considers your current or former debt history while processing your application for a Business Loan. NBFCs judge your ability to repay loans with the aid of your credit history.

Your credit history should reflect timely payments and sound debt management to be eligible for an online business loan with a lower interest rate.

  • Improve Your Business Financials

When you apply for a Business Loan, the lending institution looks at your personal and business histories. So, if your company’s balance sheet and profit and loss statement show undesirable figures, the loan provider might reject your application or charge you a higher loan rate.

Take efforts to strengthen your company’s financial position before applying for a Business Loan. 

Always remember that obtaining low-interest Business Loans requires an established company with a minimum of three years in operation and a minimum turnover of one crore.

  • Do Your Research

NBFCs offer different kinds of Business Loans. As a result, the interest rates and other fees associated with loans differ from one another.

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Conduct in-depth research and compare different loans to determine whether the loan’s eligibility conditions match your profile and fulfils your business’s objectives. Also, check out the fees and interest rates on these loans.

Make sure you choose the best Business Loan by researching the accessibility, reliability and ease of payment. NBFCs like Clix Capital provide collateral-free Business Loans with flexible repayment terms and minimum documentation.

  • Refinance Your Debts

Refinancing is another method to lower your Business Loan’s interest rate. Begin by consolidating the unpaid debt into a single loan with a cheaper interest rate if you have taken out various loans to suit your business finance needs. Once the NBFC assesses your current financial situation, it permits refinancing. 

Look at this example to understand refinancing better. Imagine you took out a high-interest, short-term Business Loan while your company was starting because you lacked the financial stability to negotiate a better rate. Once your financial condition improves, you can apply for a Business Loan with your lending institution. Then, your lending institution may decide to renew your loan after reviewing your company’s financials in accordance with the new terms and circumstances. 

  • Improve Your Relationship with the Lending Institution

Applying to your existing loan provider is one of the best ways to obtain a low-interest Business Loan. You can apply for a Business Loan with the same lending institution from where you have already taken a Personal Loan, credit card, or any other type of loan and have repaid the dues on time. 

You can negotiate a lower rate for your Business Loan if you have a good business relationship with your existing loan provider.

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Each of these recommendations has one thing in common – they all call on you to prove your financial independence to the NBFC or the lending institution. Therefore, your most important move should be to demonstrate that you have no chance of defaulting on a loan to potential loan providers. As soon as you’ve established this, they’ll be much more inclined to reduce the interest rate on your Business Loan or set it at a significantly lower level. 

However, before you start the process, be thoroughly informed about the process. You can use a Business Loan Calculator to determine your loan amount, assess and plan out your repayment schedule, and understand the distinction between your principal and interest.

So, go ahead and start your Business Loan by applying online. 

All the Best!

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