Things to Check While taking an Unsecured Business Loan

It is certainly a daunting task to fund a business to expand and evolve in a dynamic market. However, unsecured business loans can aid businesses in fulfilling the working capital requirement of the firm. While these loans are readily available, you need to keep certain factors in mind before considering to apply for a loan.

Unsecured loans do not demand the borrower to provide any collateral to the financial institution. They are based on an applicant’s credit score, financial statements and income, and other factors.

Key Factors to Consider While Taking an Unsecured Business Loan

#1: Compare loan tenure, interest rate

Companies that are planning to avail business loans should opt for a lender that provides them with the required loan amount at the lowest possible interest rate. Also, the loan tenure should be such that it fits the borrower’s repayment capacity. 

#2: The reputation of the lender

Before signing a loan agreement with a lender, you should review the reputation of the lender depending on their services and infrastructure. This can be done by conducting an online search and reading feedback from existing customers. Although these reviews may or may not be the most accurate representation of facts, they surely help in evaluating your options. 

Not all lenders will be able to lend to you the business loan amount of your choice. Every bank or provider has a set of rules that they need to follow in approving a business loan. 

#3: Loan turnaround time 

Although most of the lenders demand the same set of documents to process a business loan application, some lenders have an easier process with faster turnaround time. So one should evaluate feasibility of the loan application process before selecting a lender. This way you will save a lot of time.

#4: Supporting documents

Keep all the necessary documents ready at hand before approaching a lender. That includes your important business records and documents. Requisites to apply for a loan vary from lender to lender. Having these documents ready will help lenders analyse them faster and render solutions faster.

#5: Commercials charges

Other than interest rate one should also compare other costs such as processing fee charged by a lender, penal charges in case you miss one EMI and foreclosure charges. These costs can severely impact the overall servicing cost. 

Summary

Business loans play a vital role in launching a startup or expanding an existing business. If you manage your funds wisely and maintain your credit history, you can get an unsecured business loan approval without any hassles. Oxyzo offers loans for businesses to fulfil their working capital requirements. Also, loans can easily be obtained for the procurement of raw materials from Oxyzo.