Business loans provide you much required funds when your business hits a rough patch or when you want to expand your business. Business loans are available for a tenure of upto 5 years with interest rate ranging from 13.5% to 20%. Interest rate on business loan varies across lenders and also between borrowers even if the lender is same.
Some of the factors affecting interest rate are as follows: Credit score plays a very important role in determining your interest rate. Credit score helps lenders in deciding your creditworthiness. Good credit score implies a good repayment history, means lower chances of defaulting on loan repayment. Interest rate will be low for borrowers having a good credit score and vice-versa. Number of years for which business has been running helps in fixing the interest rate. If the business has been running for a longer period, interest rate will be low as possibility of winding up for older business is considered low. On the other hand, interest rate for newer business will be high. The profitability of your business is inversely related to interest rates charged. Higher profits implies lower interest rates and lower profits or losses implies higher interest rate on loan. Business loans are of two types– secured and unsecured. Needless to say, unsecured loans have higher interest rates in comparison to secured loans. Knowledge of these factors will act as a guide for you on the ways to reduce your interest rate.
Some of the factors affecting interest rate are as follows: Credit score plays a very important role in determining your interest rate. Credit score helps lenders in deciding your creditworthiness. Good credit score implies a good repayment history, means lower chances of defaulting on loan repayment. Interest rate will be low for borrowers having a good credit score and vice-versa. Number of years for which business has been running helps in fixing the interest rate. If the business has been running for a longer period, interest rate will be low as possibility of winding up for older business is considered low. On the other hand, interest rate for newer business will be high. The profitability of your business is inversely related to interest rates charged. Higher profits implies lower interest rates and lower profits or losses implies higher interest rate on loan. Business loans are of two types– secured and unsecured. Needless to say, unsecured loans have higher interest rates in comparison to secured loans. Knowledge of these factors will act as a guide for you on the ways to reduce your interest rate.
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