7 Tips to Ensure You Find The Best Business Loan Online

Mar 07, 2017

Rejected. Rejected. Rejected.

Ask an old business-owner what was the common response from banks earlier. It's most likely to be rejection. Business loans were not easy to avail a few decades ago.

Gone are those days now because business loans are much easier to get nowadays. No longer do you need to run from one office to another. You can simply apply for a loan online.

Sounds too good to be true, right? Naturally lots of questions may come to your mind. Are these loan offers genuine? Will they pull you into a debt trap? Are the lenders trustworthy?

Here are seven tips that will answer all your questions and help you get the best business loan offers online.

1. Check the lender's reputation

Many banks and NBFCs offer business loans. So, be careful when you select the lender. Do your research and speak to friends who took loans. Look for online reviews. Only if you see that most of the reviews are positive and the lender is reputable should you consider applying for a loan.

2. Do you get good customer support?

Look for a lender who has a strong customer support team. After all, the transaction does not end with you getting the loan. So, you must deal with a lender who will help you when you are in a fix, instead of harassing you.

3. What's the interest rate?

Different lenders offer business loans at different rates of interest. They determine the rate after considering several things. Some of those are market conditions and competition, the borrower's credit history, and the business's profit forecast. Thus, it is important to find out how much interest each lender is charging. The best business loan would mean the best rate of interest!

4. Read through the fine print for fees and other costs

A business loan brings with it several fees and costs. These include late payment fees, prepayment fees, processing fees, guarantee fees, and loan administration costs. Calculate the amount you will additionally have to pay because of those. Settle for the lender who charges the least fees and costs. Even small fees like a 1.5% pre-payment fee can turn out to be a mistake.

5. Are there any negative terms or conditions

Getting the loan is not the end of your relationship with the lender. Go through the loan's terms and conditions. These often affect your 'happily ever after'-the period of time when you pay back the loan. The terms have to be reasonable for you. Otherwise, not only will it become difficult for you to repay the loan, the entire experience will become extremely stressful. It may even reflect poorly on your credit history. So, apply for the loan only if you are happy with the clauses.

6. Improve your credit score

You can also do something on your part to make sure you get the best business loan. For starters, improve your credit score. If you have a debt, unpaid EMIs, or outstanding credit card bills, clear them. This will improve your credit score and help you get the best loan offer possible.

7. Cut off debt

Also clear off unnecessary debt. Don't be confused with improving credit score. That talks about your ability to pay off loans. Unnecessary debt is a loan that you do not really need, but one that you are nonetheless paying off on a regular basis. While that does not affect your credit score, it does affect your overall financial stability.

The bottom line

There are many lenders in the market who offer many kinds of business loans. To meet your business goals, you have to find the one that suits you the best. Keep the above-mentioned tips in mind and the process will become a lot simpler. May luck be with you!