Since most people planning to take a business loan would like the same to available at a lower interest rate. It would be helpful for them to know how they can get low-interest rate deals. Accordingly, There are a lot of factors such as the ones mentioned below playing a crucial role in deciding the applicable business finance interest rate in India. Let’s understand how the following factors affect the applicable interest rates:-
Type of Business: The first and foremost factor is business type. Some businesses are partnership firm whereas some business are Pvt. Ltd which highly influences the applicable interest rate. For instance, partnership firms are always less preferred while being approved for a business loan whereas Pvt Ltd firms are more credible. Same goes with startups and established business firms. Startups have a hard time qualifying the eligibility criterions set by the lender and thus, they are likely to get rejected. Even if they get approved, their stability is uncertain and hence, the interest rates are higher.
Collateral: Presence of a secured business loan and reduces credit risk for the lender. As a reward, the lender offers a better interest rate offer and vice versa.
Repayment capacity: Last but foremost factor to consider is repayment capacity of your business. If that’s in a sound state, you might get a better interest rate loan for an amount you desire.
Having said that, it is also important to check your eligibility for a business loan before applyingRead