Questions Everyone Should Ask Before Applying A Business Loan

Posted by Ipshita Shekhawat on June 4th, 2021

Amidst the current economic crisis, small businesses and start-ups require funding to expand their enterprise. Nevertheless, before availing a business loan there are several questions that strike the borrowers mind and need to be resolved, such as:

Are you eligible for a business loan - The exact business loan one can get depends entirely upon having a good credit score, cash flow, proper documentation and business vintage.

What are the interest charges - The rate of interest offered by different financial institutions depends on the loan tenor and credit history of the potential borrower. Thus, one can choose a lending institution that offers a competitive rate of interest.

What eligibility criteria do you need to meet – Fulfilling all listed eligibility criteria will help the borrower have a hassle-free loan application process. Thus, they can focus more on their business expansion.
What is the loan tenor - The loan repayment term decides the EMI a customer has to pay. Long tenor has a lower EMI and vice-versa.

Are prepayment facilities available - Acquiring data regarding the prepayment options provided by the lenders permits the borrower to clear off the debt against any monetary gain.

What documents do you need to submit – Keeping all of the necessary documents handy, such as business finance, ownership and personal identification documents ready can greatly help ease the process.
How much credit score is necessary to avail of the loan - A credit score determines the creditworthiness of the borrower. Thus, holding a higher score, preferably more than 750 ensures faster processing of a business loan.

Considering these simple questions should aid one greatly when he/she is about to apply for small business loans in India.