A Business Loan is a type of loan available to individuals or enterprises for starting or expanding their business or for bridging a cash shortfall.
What’s good is that with a simple Business Loan application process, Poonawalla Fincorp ensures funding is never an obstacle when striving towards success. We provide offline and online Business Loans in India to the MSME sector, and we've tailored our products and services to meet your unique requirements. However, if you have to handle many loan instalments at once, your financial situation might be strained. So, to help you pay off your debts more quickly and achieve financial security, let’s first see how Business Loan repayment works.
Whenever you borrow funds from a lender or a financial institution, it is a given that you will have to pay it back as you cannot have full ownership of the funds. Lenders collect a certain amount of funds every month in the form of equated monthly instalments (EMIs) with agreed-upon interest rates over a set period. Just like any other secured or unsecured loan repayment, Business Loan repayment works similarly. Read on to understand how you can approach Business Loan repayment for better financial management.
The type of Business Loan you have obtained will decide how much you must return. Depending on your needs, the lender’s interest rate policy, the tenure of the loan, and the purposes for which the money was borrowed, you can employ several techniques to determine the repayment schedules for loans. Some loan repayment choices are:
Also Read: How Young Entrepreneurs Can Utilize Business Loans Effectively?
Now that you are aware of how Business Loan repayment works, let’s dive into how you can pay off your Business Loan quickly. Knowing how to efficiently pay off your current debt will not only save time but will also enable you to save more of your hard-earned money.
Here's how to easily pay off any outstanding Business Loans.
Rather than just making a monthly instalment payment on a Business Loan, you can use any excess money to pay off your debt sooner. Although the lender might charge you a fee for doing this, it will undoubtedly speed up your loan repayment.
If you believe you can make ends meet by reducing your spending or raising your income, you can talk to your lender and ask them to raise the EMI payment by a specific percentage. The viability of this approach will entirely depend on the policies of your lender and the type of Business Loan you have obtained. The benefit of this is that you can pay back the Business Loan more quickly.
If you can apply for a balance transfer of your Business Loan and discover a better offer and lower interest rates from another financial institution, you might want to do so. However, always consider the viability or overall benefits of refinancing your current Business Loan before deciding.
Most lenders impose fees on the outstanding principal amount when borrowers attempt to foreclose a loan before a pre-determined number of EMIs have been paid in full. You will also be charged a processing and administrative costs by the new lender, so it is advisable to consider the overall cost before choosing to transfer your balance.
Pick a loan with a more manageable repayment period. A shorter loan repayment period is preferable to a longer one. The total amount of interest paid and the likelihood of missed payments are reduced with shorter loan terms.
This is the most underappreciated tip in the banking sector, and borrowers frequently overlook it. All EMIs must be paid back on time to have a positive working relationship with the lender, as does regular communication. You'll become more credible, which will improve your chances of getting a loan with favourable terms.
All in all, be prudent while borrowing. Avoid taking on more debt than you can afford to repay because doing so may throw your repayment schedule off-balance and if you can't afford the instalments, it might have long-term consequences on your business. So, make the most of your resources and make an ongoing effort to pay off the loan early.
You must have a fundamental understanding of how your repayment options are determined. By doing this, not only you can prevent financial surprises but avoid having to hunt for more cash in case of an emergency.
A Business Loan Repayment Calculator can help you anticipate what to expect when you decide to go for a loan. It assists in deciding:
You can use a Business Loan Repayment Calculator to estimate your monthly payments for various loans. Enter your loan amount, terms, and annual interest rate in the calculator here, then click on ‘Calculate’ to finish.
Also, check out these 3 Simple Steps to Calculate Loan Re-payments on Your Own!
Closing on your Business Loan early gives you greater confidence and frees you up to concentrate more on your business expansion. But calculate and weigh the advantages and disadvantages before thinking about early payments.
You should always consider the regulations as well as any fees or penalties associated with prepayment or foreclosure. If there are any, discuss early repayment options for Business Loans with your lender. Additionally, pursuing early repayment shouldn't cause your business cash flow to suffer or force you to take out a second loan.
Personal loans are one of the widely used funding methods that aid millions of people through difficult times.
Running a small business in India is very tough. The increasing competition, low-profit margins, and innovative business models are making it tough for small businesses to stay afloat.
Transformation and growth are a part of life. As a professional, you have immense growth opportunities, some of which you are unable to pursue due to a lack of funding.
Personal loans are the go-to option for meeting financial goals and requirements. They are unsecured loans and do not require any collateral.
One applies for a loan to meet various needs in life. These loans include business loans, personal loans, auto loans, education loans, home loans, etc.
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