Business Loan in India

Business Loan in India

Business loan offered by various banks and financial institutions in order to raise funds for startup business of your own or expand your current business. The interest rate charged by the bank will depend on the loan amount and repayment tenure.

Below are some of the factors that affect interest rates for small business loan in India:

Credit Score: A credit score is a three-digit numerical number used to define a borrower's repayment capability ranging from 300 to 900. It shows your creditworthiness to your lender. Typically, lenders use your credit score to assess your repayment capacity. If you have a good credit score, then the interest rate for your business loan will be much lower. Generally, a credit score of 750 or above is considered a good score by lenders.

So, if you have a lower credit score, then your lender will consider you to be a risky customer and it will reduce the loan approval chances as well as you will be required to pay higher interest rate for the loan. Always make sure that you check your credit score before applying for business loan in India.

Financial Record: If you have a long and good financial record that is good, then the interest rates that you will receive from your lender for your business loan in India will be low. This a because your lender will view your past transactions with your previous transaction to check your creditworthiness. Suppose if you have a positive and long credit history, the lender will consider you to be reliable and will lend to you at a lower interest rate.  If you have a bad credit history, the interest rate will be higher as you will be viewed as a risky customer.  

Loan Amount: A maximum business loan amount entails a lower interest rate than a small business loan amount. So, it is better to take a large loan for your business apart from a small loan as the interest rates will according to your selected loan amount.

Posted in Business News on January 25 at 11:26 AM

Comments (0)

No login