What to Look for When Comparing Business Loan Lenders?

Businesses, whether small or large, need a regular infusion of funds to meet their capital requirements. Funds are especially needed in the initial and growth stages of a business. This funding also depends upon how capital-intensive the business is. The two types of business loans that can be availed in India are secured and unsecured. Secured loans require pledging the business’ assets as collateral to the lender, whereas unsecured loans do not require a collateral.
 
With the digital boom in India, comparing and applying for business loans across various lenders has become quick and convenient. However, with so many options and such fierce competition, finding the ideal business loan lender can make your head hurt. To help you decide better, this article lists six critical factors to evaluate the best deal for your business loan.
 

How to choose a business loan lender?

 

1. Rate and charges

   You must be aware that interest rates charged on business loans vary across different financial institutions. In addition, your loan agreement will include several other fees,such as the processing fee, which is mandatory, while others like loan rescheduling, late EMI payment are levied only under certain circumstances.
    
   When performing a comparison, you may note these various charges to arrive at the annual percentage rate (APR). You must also know about the parameters different lenders use to determine their business loan interest rate. You can gather the details pertaining to charges on a lender's official website. If a lender does not disclose this information on their website, you may be duped by hidden fees.
    

2. Lender's reputation

   It is critical to investigate a lender's reputation before applying for a business loan. Cases of business loan frauds have been on the rise in recent years. Scammers create a fake lending website and dupe customers with low rates and a large loan amount.
    
   Customer reviews are an excellent way to assess a lender's reputation. You can read various customer testimonials available on Google and social media platforms. Another place to get a fair assessment of your lender's profile is a loan aggregator website.
    
   In addition, the 'About us' section of the lender's website will also reveal a lot about their background. If you still have concerns after going through all the preceding steps, pick up the phone, dial the customer support helpline number, and have your questions answered over the phone.
    

3. Eligibility criteria

   Consider a business loan provider who expects its customers to have a monthly turnover of Rs 1 crore to qualify for a loan of Rs 3 lakh. Would you prefer to apply with a lender like this? Unless it is the sole lender in the market, most businesses are unlikely to avail such a loan.
    
   Thus, it is critical to keep an eye on various business loan lender eligibility requirements. Most financial institutions typically offer business financing to applicants who meet the following criteria.
    

   Parameters	Description
   Citizenship	Indian
   Minimum age	21 years
   Maximum age	65 years
   Minimum experience	5 years of business experience
   Who can apply?	Sole proprietor/ retailers/ manufacturers/ traders/ LLPs/ HUFs/ Trusts/ partnership firms/ private limited