Top 10 Tips For Repayment Of Loans For Businesses
Top 10 Tips For Repayment Of Loans For Businesses Without Security
The indispensable truth for any business is that there is always a need for a business loan. Now, if you are a start-up or a small business, a collateral-free business loan (also called loan for business without security) is a blessing. Almost all the well-known financial institutes like Indifi provide such loans. You can get loans up to 50 lakhs just within a 24 hour time. While getting a collateral-free or unsecured business loan is easy, it is important to repay the loan on business on time to prove yourself as a reliable borrower. Let us check out ten best tips on how you can do that.
Understand the loan terms
The first step is to understand the terms and conditions when applying for a business loan. Make sure that the loan amount, rate of interest, the total amount you need to pay to clear the loan, and the repayment schedule is clear. This will help you pay off the loan without any hassles or confusion.
Follow The Repayment Schedule
If you are unable to pay off your business loan on time, the credit score might suffer immensely. Also, if you fail to pay collateral-free business loans, you may lose access to future capital, like credit cards and other loans. You may even face legal problems. So, pay according to schedule to build your credit reliability. This score can help you get different types of loans in the future and from the lender of your choice.
Have A Transparent Relationship with The Lender
Maintaining transparency with the lender is essential when you want to repay a loan for business without security. In case you are unable to make loan repayment in a month, keep the lender informed. If you start missing deadlines without having a proper explanation for the same, there might be severe repercussions. The best part about intimating the lender about the delay to make payment is that they might help you relieve the stress of repayment. The options generally offered by lenders under such circumstances are that they can temporarily suspend payments, provide you with good refinancing options or briefly accept a reduced amount. Another advantage of being transparent with the lender is, it enables additional financing in the future.
Choose a Payment Date or Opt for Auto-payments
Repaying business loans on time is a huge liability to the borrower. If you do not want to miss repayment of loans, you can go for auto-payment. In this process, on a particular date in a month, the EMI (Easy Monthly Instalments) will be automatically deducted from your savings account. The only catch is, you must ensure that there is enough money in your bank account on that specific date for repayment. Financial institutes like Indifi gives you a choice of repayment modes; So, if auto-payment suits you, go for it.
Another choice you get is to choose the date you want to make the repayment. If you have a specific date when you want to make all the payments together, the chances of missing out on EMIs is usually low.
Reduce high-interest rates
One of the challenges of taking a loan for business without security is, a bulk amount of money you pay goes as interest. In this way, it takes a lot of time to repay the original business loan amount. Higher interest rate also means more waste of money in loan repayments. So, if you get a good deal or lower interest rates, choose to refinance your loans. This will help you reduce the repayment amount. To get these facilities, it is always advisable to check out the features and business loan schemes of 2 to 3 financial institutes before choosing one.
Make an Extra Payment
This is one of the best ways to repay business loans faster. Utilize extra money received from profits and tax refunds to make at least one additional payment every month. You can divide the complete loan amount you need to pay in a year and divide it by 12. The amount you get is the one you need to pay every month. Add this amount to the EMI you pay every month, and your job is done!
Repay the Loan As Soon As Possible
Paying off business loans early means less repayment amount. If you can repay the loan earlier, it means that you need to pay less amount of interest. It also means you need not bear the burden of the business loan for years. Clients and sponsors also prefer a debt-free business. Choose loans from organizations like Indifi to choose your loan tenure.
Reduce unnecessary expenses
If you are facing challenges to repay the business loan, look for ways to reduce unnecessary costs and generate more revenue. Reducing excess inventory costs is one of the best ways to save money and pay off the loan for business without security quickly.
Take Advantage of Paperless Loan Applications
Sometimes banks offer additional discounts when you apply for loans online. You can also get good deals when you opt for auto payments or paperless statements. Banks usually provide better deals on paperless business loans because it saves them the cost of paper and courier.
Strategize and Follow a Structured Approach
Now, if you have multiple collateral-free business loans, list your loans and create a plan to pay off all in the least amount of time. The first step can be to arrange the loans from smallest to largest; Make minimum payment to all your loans except the smallest one. Pay as much as you can on the smallest loan amount. Repeat this approach until each of the business loans is paid in full.
A business loan can go a long way in expanding your business. So, no matter whether you are expanding your existing business or starting a new one, with a loan for business without security, witness your business achieve new heights. If you are tensed about the high-interest charges on business loans without security, follow the top 10 tips mentioned above to repay loans quick and easy.