Small and medium-sized business owners usually need a reserve of ready funds mostly in the form of a business loan to maintain and increase their cash flow, purchase equipment for the business, or grow the size of the production and the company as a whole.

Usually, business owners used to use their credit cards or give up a piece of business to investors to meet these financial requirements since loans offered by financial institutions have high-interest rates. Credit score and banking history are also sometimes an obstacle in the process of obtaining business loans.

However, there are NBFCs (Non-Banking Financial Companies) whose goal is to help such businesses in obtaining loans easily without focusing too much on criteria like credit scores and banking history. While the process of availing business loans has gotten easier, it is important for business owners to decide the amount they need, the reasons and priorities for utilizing the funds, and the time period required for repaying the amount. There is no doubt that loans are very important, especially for businesses in the nascent stage to keep full control over their business and raise capital quickly, which is why these banks provide loans at lower interest rates. Below is a 5-step guide to help you choose the right loan for your business.

5-Step Guide to Choose the Right Loan for Your Business

STEP 1- Jot down why you need the loan 

The answer to this question will narrow down the type of loan you will be needing as there are plenty of types of loans available. If you are running low on cash flow, you might need a line of credit whereas if you want to improve your infrastructure, a real estate loan would be more helpful. Understanding the need for a loan yourself will let you make a wise choice to help you to achieve your long-term business goals

STEP 2- Figure out and analyse how much loan you need

From hundreds to millions, there are loans of every size. For e.g., if you are a small business owner, you will need a small business loan, but to understand the exact amount, you must keep in mind the capacity of your business to repay the amount without hurting your cash flow. The size of the loan should be big enough to cover expenses and small enough to help you manage the loan repayment.

STEP 3- Be honest with your creditworthiness

As easy as it is to get a loan from NBFCs, they do check your banking history to determine the amount of loan that can be disbursed to you. Therefore, expecting a huge amount without knowing your creditworthiness and having unrealistic expectations might have a negative impact on your business.

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STEP 4- Finding a right lender

Once you have analyzed how the loan amount you need for your business, it’s time to choose the right lending partner that offers multiple benefits like low processing fees, lower interest rates, easy loan repayment options, minimal documentation & more.  Thus, compare the different business loans providers available both online and offline and choose the one that best suits your business needs.

STEP 5- Plan and apply

After all these steps, it’s time you prioritize the needs of your business, the size of the loan, and the repayment period. Collect and organize all the important documents required by the lender beforehand for a seamless and quick process.

Grow your business with the right financing partner

A business loan can be the turning point in the life of a business to help it thrive and burgeon in the competition again. Choosing the right business loan while keeping all the factors in mind is a wise choice to make.

At Protium, we actively focus on disrupting the lending space by making innovative financing solutions accessible to businesses in a simple and secure manner. Get quick and easy financing at attractive interest rates and comfortable loan repayments with Protium. Feel free to get in touch with us in case you have any queries.

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