Having enough funds at your disposal is an absolute necessity for running a business. And, there are times when a business would require more capital infusion. During such moments, business owners have a choice: borrow money from friends or family or apply for a business loan. However, before availing any kind of loan, from a bank or non-banking financial institution (NBFC), it is important to compare it with loans from other lenders available in the market. Only after studying thoroughly their features and benefits, the borrower should decide or proceed with the loan.
Why should we compare loans?
When you compare loans, you may acquire the most ideal loan available in the market. There are many features and benefits provided in aplenty in the market for such loans. But you should only select the one that is best suited to your needs and requirements. So, carefully selecting a loan curated only for your requirements is important. As going for a wrong category of loan may only lead to more debt or financial burden. So, be vigilant while comparing and select that suits both your requirement and income.
What is the best way to compare business loans?
There are few parameters that should be kept in mind while comparing business loan. These parameters are:
Business Loan Eligibility
With so many lenders in the market there are various parameters for checking eligibility too.Before applying, check business loan eligibility using a business loan eligibility calculator and accordingly proceed.This exercise is important as it will reduce the chances of your application getting rejected.
Documents required for Business Loan
Like eligibility, the criteria for documents also vary. Some lenders ask for a lot of documents where as some agree on minimum documents. You can opt for a lender based on what documents you can readily provide. Plus, it is advisable to avoid lenders who ask for a pile of documents.
Terms and Conditions of a Business Loan
Some lenders have extremely rigid terms whereas some are very lenient. To meet those terms and conditions could be a task for small business owners. Therefore, it is advisable to go through the terms before applying to avoid rejection.
There are two types of business loans in the market, with collateral and without. Loans without collateral are disbursed easily but collateral loans take time. However, the interest rate is higher on loans without any collateral. Once you have decided which one of the two suits you best, you can apply accordingly.
Annual percentage rate is the annual cost of a business loan. Other than fixating on a lower interest rate we should also take APR into account. As the APR can increase or decrease the total cost of the loan.
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Also read how a business loan will benefit you in running your business only at Finserv MARKETS
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