What happens to me after I take a business loan?
Posted by KushiBL on March 27th, 2020
You have successfully applied for the business loan, and your repayment period has set in. It is every entrepreneur’s joy and desires that they can make the EMIs efficiently and on time. Sometimes, even with excellent planning, some incidents happen and render the borrower incapable of repaying the loan on time. However, loan aggregators help you with the best repayment options for a good 5 years. Explore Buddy Loan in order to reap more benefits for a business loan.
This is a frightening situation as much as it is depressing. However, do worry as you can approach the bank and explain your situation to the bank. Banks are institutions governed by a code of ethics. When you explain your situation to the bank, they will find the right way to go about paying your business loan.
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If anything happens to you after you take the business loan that renders you unable to service your EMI, then the bank may alter the loan tenure or give you a repayment holiday.
Disadvantages of defaulting
• Higher interest rate
Failing to pay your business loan will result in a higher interest rate in your future personal loans as well as a business loan. You should, therefore, be cautious about your payment dates so that you remain on schedule.
• Lower credit score
Late payments will result in you losing your previously held credit score. Ensure you pay your EMIs on time so that you can improve your credit score. Your credit score determines your future loan approvals.
• Additional cost
When your interest rate is higher, then your business will suffer additional cost, and you will also not be able to claim a tax exemption.
• Action from the borrowers
When you realise you are having challenges in serving your loan, then you should take the initial step to approach the bank when you notice difficulty is servicing your loan
• Declaring bankruptcy
The lender may declare you bankrupt and proceed to sell the assets that you may have attached when applying for the loan.
When you take some short term loans, the business is sometimes pushed to the edge and is unable to service the loan repayments. However, there is reprieve when you apply for a long term loan to refinance the short term one.
• Reschedule your loan
You may ask your business loan provider to help reschedule your loan repayment tenure. You may choose to increase your loan tenure so that you pay small EMI. Thereby giving you time and comfort to pay back your loan.
If you fail to pay your EMI on time and you want to avoid running into problems with the bank, then you can choose to foreclose your loan.
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