As a small business owner, when do you have complete peace of mind? Well, to be truthful, a business owner can never be in complete peace. After all, there are so many things that you need to take care of, such as production, sales, marketing, accounting, finance, etc. These essential functions are a part and parcel of running a business and should not be ignored at any cost. In big companies, there are proper departments to handle such crucial functions, but it is not the case with a small business.
You have limited resources at your disposal from which you have to maximize your returns. Due to these constraints, you have no other option but to manage these functions by yourself. This leaves you with little time to look at some other important matters, such as the position of liquidity in your business.
As a result, you might suddenly have to face a financial emergency but will not have enough cash to take care of it. But there is no need to panic as you have an excellent option of availing unsecured business loans from financial institutions operating in India. These financial institutions offer business loans for various business-related requirements, such as payment of bills, upgradation of infrastructure or purchase of equipment and machinery.
Where to Apply for a Business Loan?
Where to apply for a Business loan? A question that often arises. As you are already slammed with multiple tasks, the last thing you want is to run from banks to banks looking for a business loan. This is where you need to think smartly and avail the services of an online lending company to cater to your financial requirements. These companies follow relaxed eligibility criteria for small business loans, wherein they have developed their own assessing criteria which are given more weight as compared to CIBIL. Online lending companies offer you instant unsecured business loans of up to Rs. 5 Lakhs if your business has a gross annual turnover of more than Rs. 10 Lakhs. The amount that you borrow as an unsecured loan, needs to be repaid in easy EMIs extending up to 24 months.
The money that is borrowed as an unsecured loan can only be used for a business-related purpose. Moreover, you can pre-pay the loan account at any time when you have enough funds as there are no additional charges levied against the foreclosure of a business loan from online lending companies.
Eligibility Criteria for Small Business Loans
With their easy eligibility criteria for small business loans, you can conveniently apply for an unsecured business loan with an online lending company using their smartphone app or website. Just log-in and upload the necessary documents and if your profile meets their eligibility criterion, the money would be credited to your account within a few working days.
About Business Loan Prepayment and when to opt for it
When you avail a business loan for a financial emergency, it is basically due to the fact that your payments have not been realized the way you expected them to be realized. Therefore, it is very much possible that after you have availed the business loan, your payment also got realized. Now that you have enough money with you to pay off your business loan, then why should you be bearing the interest cost on it. In such a situation, you must contact your lender and opt for the foreclosure of your business loan account. Most online lenders allow for pre-payment of business loan amount without levying any additional charges.
Paying off the loan before its scheduled time not only helps you save a lot of money on the interest cost, it also helps with the improvement of your credit score. The main point that you need to focus on here is that when should you opt for business loan prepayment because this will determine the number of advantages that you can avail from it.
Tips to you decide on the prepayment of your business loan
• When you have paid only the initial few EMIs (max 4-5). Every repayment schedule ensures payment of interest faster than payment of principal. If you have only last 5-6 EMIs pending then it is better to pay the remaining amount through EMIs, as you have already paid the interest component and only the principal amount is left.
• When you have enough spare cash with yourself because it won’t make any sense if you prepay the business loan and then face a cash crisis all over again.
• When you want to avail another business loan of higher value as compared to the existing one. Your new lender might ask you to foreclose other running loans before disbursing your amount.
• When you want to improve your CIBIL score or eligibility amount for a new business loan. Paying-off your existing liabilities is an excellent way to improve your CIBIL score and enhance your eligibility amount for a new business loan.
Therefore, you need to try and pay-off your business loans as soon as possible because it helps you build a good credit history as well as save a lot of money to be paid as interest.
