The GST implementation has just kicked in and your business could be one of those covered under the duty drawback scheme. If yes, then you might soon be facing a temporary cash crunch for managing your daily finances – since claiming refunds from the GSTN portal can take up to 2 months (60 days). To overcome this, you can apply for a short term working capital loan and ease your daily operations.
There are many non banking financial institutions in the market providing short term business loans for small and medium enterprises. But you need to be careful of certain things while taking a business loan to avoid over-stretching your resources during repayment.
Here are a few pertinent questions you should answer before applying for a small business loan.
What are your financial requirements?
Small amount of loans are easier to secure from NBFC lenders (although it also depends on your credit history), whereas if you are looking for a larger amount, make sure that the expenditure is justified.
Where are you going to invest the loan amount?
For short term requirements and working capital investment it is better to negotiate a short term unsecured loan, whereas for longer term capital investments you can opt for secured business loans as they have the added benefit of having lower interest rates.
How urgent is your requirement?
Depending on your loan requirements, you should also determine the time period within which you will be needing funds. E-lenders like Lendingkart have a 3 days turnaround time for verified loan applications.
How fast can you repay?
If you think that you will be able to payoff your loan liabilities sooner, opt for a flexible repayment plan. Most banks have stringent repayment schedules whereas NBFCs can help you in this regard with their flexible repayment schedules and schemes like waiver of pre-payment charges. Or, if you wish for a more relaxed repayment schedule, NBFCs can help you out with that as well – Lendingkart offers business friendly EMI structuring and repayment schedules.
How stable is your business?
You might not get a quote for the complete loan amount you applied for, or the rate of interest offered might be kept high by the lender – if your credit history is off track. In case you can delay the investment for some time, make use of that period to stabilise your business and get your credit rating in the green zone to get better loan terms.
How much collateral can you put up in case it’s a secured business loan?
If you are going for a secured small business loan, get your assets valued and intimate the lending agency or bank of the current value to get the best loan terms. However, don’t be lured by the valuation of your assets – borrow only the amount which is absolutely essential for your business – as it may pose unnecessary risk during repayment.
Once you have veritably answered all these questions, register online with a business loan provider. NBFCs like Lendingkart have a 3-step registration and loan application process. Apply for a business loan online by uploading relevant documents and get a quick quote from the lender.