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7 Strategies on how to get a low interest business loan

Low interest business loans: Importance and strategies

how to get a low interest business loan

Introduction 

Business loans are a common requirement, irrespective of the business size and industry vertical. It can be required for buying assets, purchasing inventory, requiring working capital, etc. However, the business loan comes at a cost known as the interest. The lower this interest rate, the lower the cost of taking the loan and the swifter the loan payback. 

In this article, we will introduce you to the importance of low interest business loans together with some strategies to avail of the best low-interest business loans

Why is it important to get a low interest business loan? 

A low interest business loan truly provides a financial boost for the business by providing the best terms while also accomplishing business goals. There are different benefits accrued from securing affordable business financing. These include: 

Reduced costs

A business loan at low interest means that there will be less expense accrued in the name of interest throughout the loan. This will help in saving valuable money that can be re-invested in the business at a later point. 

Enhanced credit rating

Another benefit derived is enhanced credit rating because of the record of a low interest business loan. It will assist the business in timely paying the instalments and enhancing their credit rating for the future. 

Tax savings

In certain cases, the interest on a low interest bank loan might be tax deductible. It will assist in further enhancing the monetary savings of the business. 

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7 tips to get a low interest business loan 

With an understanding of the importance of low interest business loans, let us now look at how to get a low interest business loan. It requires a strategic approach, combining a multiplicity of factors such as: 

  1. Maintain a good credit score

The credit score serves as an indicator of the creditworthiness of a company and hence is an important indicator. Maintaining a credit score of 700 or above presents the business in a positive light and helps secure small business loan interest rates

This is why it is crucial for businesses to regularly monitor their credit score and adopt best practices for maintaining a good credit score. 

Also read: Unsecured loans: How does it impact the borrower?

  1. Ensure timely EMI payments 

The record of timely EMI payments is a small-interest business loan eligibility criteria. It indicates the financial responsibility of the business owner and assists the new leaders in trusting the business to offer good deals. 

As a result, always focus on timely paying your EMIs. You can set up auto-payments to never miss out on paying an EMI. 

  1. Up to date financial statements 

Positioning your business in a way that showcases stable financial health is one of the factors affecting business loan interest rates. Focus on the main financial indicators such as turnover, upcoming projects, and the overall finances of the business. Stability reflected in the financial statements helps build the trust of financial lenders.  

As a result, it helps in getting business loans at low interest rates. 

  1. Develop a strong business plan 

Another integral part of the business loan application process is presenting the business plan to financial lenders. Ensure that you have developed a thorough plan, clearly demarcating the goals, priorities, and strategies. 

This helps in expediting the loan approval process by creating a positive impact on the lenders. Further, it also stands as proof of commitment and management to persuade the stakeholders. 

  1. Find opportunities for refinancing 

Comparing business loan rates is integral to ensure that you are getting the best deal. Further, consider options of refinancing to reduce the interest rate on the business loan. 

Consider options such as balance transfers on the outstanding amount to reduce the interest rate. Further, being aware of the market and different offers also assists in negotiating business loan terms and getting the best deal. 

  1. Offer collateral as security 

Offering collateral as security provides a safety net for lenders that encourages them to offer business loans at relatively lower interest rates. As a result, it is important to consider the collateral cause and look up the benefit it brings you in your loan interest rate negotiation. 

You can offer collateral such as equipment or property depending on the loan amount you are seeking. 

  1. Build healthy lender relationships

Building rapport with lenders is an effective long-term strategy for businesses to get loans at lower interest rates. This includes making timely payments, responding to lender requests, communicating effectively, and building trust. 

These activities together contribute to gaining favour in the eyes of the lenders. A healthy relationship can help you not only get a low-interest-rate loan today but also in the future. 

Also read: Facilitating cross-border transactions: NPCI’s ambitious plans

Summing up 

The above-mentioned tips for securing a low-interest business loan can help you with financing. By focusing on these strategies businesses can improve their chances in the present and also work on their long-term creditworthiness for the future. This ultimately helps by contributing to the financial growth and success of the business.

 Further, a low interest rate also indicates less repayment, making it simpler for businesses to pay back the loan. Always remember that each penny saved is a penny earned and when we talk about business loans, the amount saved can help you build an enormous saving pool. To learn more, read StockgGro blogs.

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StockGro Team

StockGro is India’s first and largest ‘Social Investment’ platform aimed at helping you master the art of “Trading & Investment”. Trade, Invest and get rewarded to Learn everything about ‘Investments’ the fun-filled way.

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