Five Mistakes Business Loan Applicants Should Avoid
I am very much surprised to know that majority of Business Loan Applicants always makes mistakes while selecting business loans. Let’s understand by an example, imagine that your car is like your business, wherein car needs proper oiling & servicing on timely basis along with regular fill up of fuel to run smoothly.
In the same way a business needs long term funds to support the capacity and short-term loans for smooth functioning. However, if the funds are expensive or not as per requirement then all efforts will go into vain.
A business man is more focused upon revenue generation instead of making emphasis upon selecting the correct business loan. We may also say that it is because she doesn’t have much of time for research and development. So Munafa-Wala is here to help you.
Five common mistakes that every business loan Applicants does while taking business loan
- Avoid Multiple Business Loans: – In business whenever need of funds arises it comes in very urgent manner. Hence mostly businesswomen apply in hurry for business loans to multiple banks & NBFC . Herein the catch comes when agent misleads you and make you to apply at multiple Banks/Nbfc. Many times agent says that it will help you get the required funds. However in actuality it gets sanctioned by multiple agencies. Then finally you end up taking multiple BL which increases interest cost for you.
- Avoid Higher Value Business Loan Against Actual Requirement: I met many businessmen and found that they usually asks 2-3 times of actual requirement. It will unnecessarily burden business with higher loan amount. So avoid this practice. You need to thorough understand your need of funds.
- Avoid Loans at High Interest Rate: Whenever you apply for the business loan then before sharing papers, always ask for the applicable interest rate. It will save both your time and efforts being enforced for the business loans.
- Understand Flat Interest Rate vs Reducing Interest Rate: The borrower must understand that lower flat rate is actually higher interest rate as it is applied on full amount of loan during the tenor of loan. in case of reducing interest rate on the contrary it is applied on outstanding principal every month. Hence 10% of flat rate is actually much higher if calculated on reducing principal outstanding.
- Check Sanction Letter: This is very big mistake that majority of Indian business men does that they prefer what agent or relationship manager says instead of what is written in sanction letter. We need to check key condition to compliance, Sanctioned Amount, Interest rate applied etc.
Hence in the end I just want to tell you that it is only your approach which can save your hard-earned money. In case you need our expert advise then your can contact us and for you it is free of cost. Munafa wala is having office in Jaipur and serving PAN INDIA. The article is written by Pradeep Natani.