5 Business Loan Mistakes to Avoid
Every small business needs a regular infusion of timely funds to grow, expand and reach its potential. As a small business owner, perhaps you too are looking for a Business Loan that may be repaid over a period of time or may be used to meet a short-term requirement. While this is a good plan, make sure you go about getting the right loan for your business in the right way, avoiding these common pitfalls when borrowing money.
Here are the 5 most common mistakes that small business owners make when applying for a Business Loan:
Maxing Out Your Credit Cards
We understand that for every small business to grow, it sometimes needs quick cash—whether it is to help the business be more competitive with the crucial 2% cash discount on purchases for consumers or being able to complete a purchase you hadn’t planned for. Once the credit card has been swiped however, the repayment may take longer than you planning. This burdens the business with high interest and may result in affecting the business owner’s credit. Instead of reaching for the credit card to meet sudden expenses, try taking a Business Loan. The Bajaj Finserv small Business Loan with low interest rates is a good alternative to a credit card with its flexible repayment options.
Ignoring Information Requests From the Lender
When you take a Business Loan, be alert to all communication from the lender and make sure your communication details are correct. Typically lenders such as banks and financial institutions ask for a large amount of data even after finalising the loan amount, interest rate and repayment term. Failure to provide the required document can result in the business losing the loan. At Bajaj Finserv, the small Business Loans come with an easy application process, hassle-free documentation, low interest rates for small business and easy repayment options, so consider that as you shop for the right lender for your Business Loan.
Not Reading the Fine Print
The typical Business Loan document has a lot of terms and conditions printed in small font. These terms and conditions are not highlighted at the time of signing the loan document and often contain conditions that limit the business owner’s ability to repay the loan. These may include a fee on prepayment of the loan amount or a clause not allowing prepayment of the loan amount. Be careful when signing any loan document and ensure you have gone though all the fine print before putting your pen to paper!
Borrowing to Create Surplus Cash
It is often a common practice by small business owners to borrow a larger amount than required when it comes to Business Loan with the perspective that it is not easy to get a fresh loan quickly. Small business owners also mistakenly believe that the extra funds will earn interest in their bank’s current account. This is a typical small Business Loan mistake. Your Business Loan should always be for a specific reason so that the funds are utilised in the most efficient way. Bajaj Finserv’s small Business Loans provide the flexibility of depositing any excess cash to pre-pay the loan amount with idle funds.
Failing to Shop for a Small Business Loan
Many small business owners tend to underestimate the size of their business and are therefore happy when a bank or financial institution offers them a loan. In fact, what you should do is shop for loans from various lenders with easy documentation requirements, low interest rates and easy and flexible repayment options such as Business Loans from Bajaj Finserv.
Bajaj Finserv understands that small businesses have erratic requirements for money. That is why we provide competitive interest rates, easy repayment options, allow part payment of Business Loans and only charge interest on that part of the loan, which is being utilised.