It is very important to have a clear understanding of both the internal as well as external factors that affect business loan interest rates to get the best deal on your business loan. Many of the borrowers might not be aware that the interest rate on business loan differs from one financial institution to another. Many times even the same lender offers the same business loan to different borrowers at a different rate of interest. Internal factors that affect business loan interest rate includes credit score, time in business, type of business, business plan and revenue or sales. On the other hand, external factors are the rate of inflation, RBI’s monetary policy, loan demand and supply, type of loan etc. All these factors directly or indirectly affects the interest rate on the business loan and the interest rates are one of the most important aspects to determine when you opt for a loan as the lower rate of interest help you to grow and higher interest rates may lead to a vicious debt cycle. Therefore, it is advisable to analyze all internal and external factors as well as the probable pros and cons that might affect your business loan interest rates before applying for the one.
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