Many successful entrepreneurs started their entrepreneurial career by quitting their already existing job in a leading company. If you have plans to start your own venture or grow the existing one, taking a short-term loan might suit your foreseen goals. Also, loans are easily available these days since the rise of digital lending in India. However, to choose the right short-term business loan, you need to know about things like rate of interest, processing fees, repayment, down payment etc.
So, what are the things to consider before applying for a loan? Read on for several things about short-term loans and negotiate better with the loan brokers:
Type of loan
Before you seek for a loan, you need to know about the available options in short-term loans, so you could decide what loan you need. Some variants are bank overdraft, credit card finance, and the new age digital lending solutions.
Rate of Interest
Always be prepared to meet bankers and private financiers that will offer loans with higher interest rates. Also, compare the benefits and interest rate. Since the banks and private financiers compete to have you as a client, it’s your privilege to browse around for the best possible option.
It’s very crucial to be aware and recognize these hidden costs because they may not be evident in the interest rate, but will be included in your monthly payments to sip-in your wealth drop by drop. In this case, it’s better off choosing a loan at a feasible higher rate than to lose a high amount every month through hidden charges.
Period of loan
Businessmen apply for a short-term loan because they don’t want to bear the long-term EMIs and interests. They take the loan, use it for their plan and pay it off within a year. The length of the loan will depend upon the type of the loan and the amount. But keep in mind that a business loan shouldn’t be a burden on your shoulders. A smart way to tackle this is by evaluating the loan options – choose the one with the lowest EMI and check which one offers the longest tenure. This will give you more time to repay the loan.
If you’re seeking a loan from the bank, understand that for protecting themselves from the possible risk is the primary interest of a bank. That’s why you’re required to make a downpayment, especially for a higher amount. However, in the recent past, digital lending solutions have emerged that do not consider credit score and give loans without collateral, let alone down payment. So, the next time you need a loan, go digital!
Short-term loans usually have large EMIs. This makes it crucial for you to calculate the monthly repayment amount and your capacity to repay the loan. Also, make sure to consider your daily operating costs and cash flows in the calculation. This will help you to choose better options.
Calculate your risks
Before you decide that you need to get a loan, ask yourself what benefits will you be able to reap out from this loan? Will you repay the amount every month and sustain the working capital for the day-to-day activities? If your benefits weigh more, then you can go ahead with the investment.
Plan for the loan
It is advisable to draw a plan about how you will be using your short-term business loan. Have a strategy for the investment; without it, you may be prone to make desperate and logic-defying decisions.
We know how a business owner is always on their toes managing people and making managerial decisions for the well-being of the company. And at these times, a financial hindrance might waver their confidence. If you ever fall into this situation, remember that the new age has innovative and feasible financial solutions available. Nothing could be more convenient than registering online and getting a loan in a few days. We disburse the loan at the right time and make you ready for the opportunities.