Whether you are an entrepreneur or an existing business owner, it is possible that you require external finance. You need funds to buy equipment, meet working capital requirements, or expand your business.
In case you require funds, you may choose from multiple loans offered by the many financial institutions in India. With several available options, making the right choice may seem confusing. If you are not cautious, you may work with the wrong lender and face severe consequences.
Here are some basic questions that you must answer before you apply for a business loan.
- Quantum of funds needed
- Loan duration
- Purpose of loan
- Other outstanding loans
- The time required for repayment
- Credit score
- Number of years in business
- Type and quantum of collateral
- The current financial situation of your business
After answering these questions, you may apply for a loan offered by the lenders. Here are three tips to help you choose the right loan:
1. Review the purpose and loan amount
Lenders offer different types of business loans to meet the various needs of borrowers. You need to review the purpose for which you need funds, such as meeting working capital, a line of credit, vendor financing, or others. Moreover, you need to understand how much of the fund requirements may be self-financed. This will help you narrow down potential lenders.
2. Check the eligibility
Whether you are a Micro Small Medium Enterprise (MSME), Small Medium Enterprise (SME), or a large, venture you need to meet certain eligibility criteria. It is recommended you check these criteria to understand if you qualify for a Mahindra Finance SME loan or not. Moreover, you must also check terms and conditions, interest rates, loan tenure, processing fees, and other charges before you avail of a loan. Knowing the repayment schedule prior to disbursal will help you plan your finances properly to ensure that you are able to make timely repayments on the borrowed amount.
3. Processing time
Lenders may take a few weeks to several months to process your SME loan application. It is recommended you check the processing time with the prospective lender to ensure you receive the funds when required.
Use online financial platforms to compare various lenders and to procure an affordable interest rate. Adhering to the aforementioned tips ensures the procedure to apply for an MSME loan is quick and hassle-free. It is crucial to work with a reliable lender to avoid any issues in the future.