Impact of Business Loan EMI Bounce on Your Creditworthiness

Whether you missed paying the EMI or did not have sufficient balance in your account, a Business Loan EMI bounce negatively impacts your creditworthiness. Thankfully, you can take measures to reduce the repercussions of EMI bounce. Read on to learn how EMI bounce affects getting a Business Loan and ways to reduce its impact. 

How Does An EMI Bounce Impact Getting A Business Loan?

A Business Loan EMI bounce indicates a potential inability to manage finances responsibly. This will leave a negative mark on your credit report and impact your creditworthiness for a specific period.  

How to Reduce the Negative Impact

Here are a few easy but effective measures you can take to reduce the negative impact of Business Loan EMI bounce:

• Set-up Reminders: Create reminders on your mobile phone for your EMI payment dates and get alerts.
• Maintain a Cash Reserve: Keep your business account sufficiently funded to cover loan instalments. Aim to maintain at least three months' worth of repayment value as a buffer.
• Prioritise Debt Repayment: Emphasise debt repayment as your top priority and exercise strict control over business expenditures. Minimise non-essential expenses during the initial business phases to allocate more resources towards debt servicing. Effective money management is crucial for meeting loan obligations and maintaining financial stability.
• Consider Refinancing: Refinancing can be beneficial for start-ups or businesses facing financial strain due to short-term loan burdens. Many lenders offer refinancing options with smaller payments spread over longer timeframes, alleviating immediate financial pressure.  
• Remember Your Payment Dates: Stay informed about your loan instalment due dates to ensure adequate funds are available in your account.  
• Restructure Your Loans: If cash flow issues persist, consider renegotiating loan terms with your lender. Adjustments such as lower interest rates or extended loan terms can reduce monthly payment burdens, making repayment more manageable.
• Communicate With Your Lender: If you anticipate difficulty in meeting payment obligations, have a conversation with your lender. Initiating dialogue shows responsibility and may result in favourable adjustments.
• Seek Legal Advice if Necessary: If defaulting becomes inevitable, seek legal counsel to understand your rights and explore potential legal remedies. A legal expert can provide clarity on your available options and help navigate the implications of defaulting on business debt.

Also Read - What Happens if You Can't Pay Your Business Loan EMIs?

To Conclude

A single Business Loan EMI Bounce is only a setback, but it does not have to be a financial disaster. By taking swift action, maintaining open communication with your lender, and implementing sound financial practices, you can minimise the damage and rebuild your creditworthiness. Remember, a history of on-time EMI payments demonstrates your reliability as a borrower, making it easier to secure future funding for your business growth.

Frequently Asked Questions

1. What are the charges for EMI bounce?

EMI bounce charges vary depending on the lender but typically fall between Rs. 400 and Rs. 590. If you have an Electronic Clearance Service (ECS) set up for automatic payments, the system will usually attempt to withdraw the EMI again the following day.

2. How can I stop EMI bounce charges?

To prevent the risk of defaulting on EMIs or incurring bounce charges, it's advisable to maintain an adequate balance in your EMI-linked account, set up auto-debit for seamless payments, diligently monitor payment due dates, and keep track of your EMIs.

3. What happens if I fail to pay my Business Loan EMI on time?

Failure to pay your Business Loan EMI on time may result in your lender imposing late fees or penalties. Subsequently, you may receive a notice requiring an explanation for the default. Lenders often provide a grace period for clearing overdue EMIs before considering legal action. Persistent non-payment could lead the lender to initiate civil proceedings against you.

Disclaimer

We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Business Loan disbursal is at the sole discretion of Poonawalla Fincorp.
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