5 Checkpoints Before Selecting Your Business Loan Lender

Businesses require capital to conduct their operations smoothly and efficiently. Quite often, business owners may fall short of cash. Unavailability of finance may have serious consequences on the running of the business. A solution to such an issue is borrowing loans from either a bank or a Non-Banking Financial Company (NBFC).
Selecting the right lender is a crucial factor to be considered while obtaining loans. The choice of a lender determines the interest rate and other loan-related aspects like fees and charges, repayment schemes, and loan tenure, besides many others. Some lenders may offer lower interest rates but levy a higher processing fee. It is, therefore, important to compare various lenders and then make an informed choice based on your needs.
Following are five factors to consider while selecting your business loan lender.
1. Reputation Select a lender who is reputed and well-established in the financial market. You may conduct an online research to identify how long a particular lender has been in operation. Such lenders are knowledgeable about latest trends and also offer the best rates in the market. These lenders also offer preferential rates for existing customers, which helps to reduce the overall loan amount.
2. Interest rates offered Another aspect to keep in mind while making a lender choice is the interest rate offered. As interest is the most important aspect of the loan, it is necessary to lay emphasis on this factor. Interest is the profit margin of the lender. Higher the interest rate, higher will be the cost of servicing the loan. Therefore, choose a lender that offers competitive interest rates.
3. After-sales service The after-sales service offered by the lender also plays an influence on the choice of lender. Check the responsiveness of queries, their response time, and communication channels, besides others. For this purpose, you may read reviews of past and existing customers on blogs, forums, and the lender's website. Only if the lender has received positive reviews, should you go ahead with the loan application.
4. Repayment options
Sometimes, the revenue of a business may increase; while other times it may decrease. Flexible repayment options let you either pay a higher sum or lower the sum according to the business' cash flow. However, not all financiers offer such a flexible repayment option. Therefore, compare various lenders and choose one which provides the benefit to repay as per the cash flow of the business.
5. Fees and charges Check various other fees like processing fee, cancellation charges, foreclosure fees, and duplicate repayment schedule fee. Some lenders also levy a prepayment fee in case of an advanced payment. Therefore, do your due diligence and check the lender's fees and charges either on the website or by visiting a local branch.
Choosing the right lender is not a cumbersome task if you keep the aforementioned aspects in mind while applying for a business loan. It is also important to check if the lender approves and disburses the loan quickly. Additionally, you may check the offered loan tenure as well as the loan limits. Make a final choice only after thoroughly considering all these aspects.