Apply for Business Loan!
A Business Loan can help you finance the growth and expansion of your business. However, loans are a liability and
you should try to minimise your loan cost. With the right negotiation strategies, you can get a Business Loan at
better loan terms.
Can you negotiate Business Loan terms?
The terms of a Business Loan are not the same for every applicant. The Business Loan interest rate, the loan amount, repayment period, and other terms are based on the creditworthiness of each applicant. You can negotiate with your lender to get better loan terms by demonstrating yourself as a low-risk borrower.
5 tips for negotiating better terms on your Business Loan
1. Compare the loan terms offered by multiple lenders
Don't select a lender hastily. Devote some time in researching different lenders in the market and compare the Business Loan terms offered by them. Choose a lender that offers flexible Business Loans terms to make sure that you can negotiate better loan terms.
For instance, Axis Bank offers Business Loans starting from ₹50,000 up to ₹75 lakh, depending on the eligibility of your business. You can apply for a Business Loan online or at the nearest branch. Axis Bank offers flexible tenures ranging from 6 to 60 months as well. If you are a pre-qualified Axis Bank customer, you can apply for 24x7 Business Loans digitally.
2. Leverage the financial strength of your business
Use your cash flow statement, balance sheet, profit and loss account, and income tax returns to show that your business is financially sound. A lender is more likely to provide loans on favourable terms if your business has a stable income. Use a Business Loan EMI Calculator before applying for a new Business Loan to make sure the business would stay financially strong after getting the loan.
3. Offer a collateral
Collateral or security is an asset pledged by you to a lender to secure a loan. It acts as protection for the lender if you default on the loan. Offering collateral like inventory, debtors, or other assets can help you obtain better loan terms. This reduces the lender's risk and can lead to lower interest rates or higher loan amounts.
4. Take advantage of your existing lender relationship
If you have been dealing with a bank or a financial institution for a long time, use the relationship as a leverage to negotiate loan terms. For example, approach the bank branch where you have opened a Current Account or an Overdraft Account for your business. The lender may provide you better loan terms considering your good relationship.
5. Improve your credit score
A credit score is one of the most important aspects that lenders check while evaluating loan applications. Having a good credit score denotes that you pay your dues on time and use your credit responsibly. Make sure that your business has an excellent credit score before submitting a loan application. Pay your existing dues on time and keep your credit utilisation ratio low to improve your credit score.
Also Read: What are the different types of Business Loans?
Conclusion
Lenders offer Business Loans at better terms when they believe that your business is financially stable and is creditworthy. Use your existing business credit responsibly and make your finances strong to get a Business Loan with favourable terms. Use the tactics mentioned above while negotiating for Business Loans.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
