A Quick Business Loan Repayment Guide
Business Loans are the most popular financing products for SME owners to raise quick funds. Are you worried about repaying the Business Loan fast? If yes, this quick Business Loan repayment guide is for you. Instant Business Loan repayment includes – the principal and the interest amount. Know how the repayment works and how to complete the repayment successfully.
Understanding Business Loan Repayment
When someone takes a Business Loan, it needs to be repaid in equated monthly instalments (EMIs). Lending institutions give flexible repayment options to borrowers to reduce their EMI burden.
When Does the Repayment Start?
Customer-oriented NBFCs enable entrepreneurs to apply for unsecured business loans online that they approve after in-person verification and disburse the funds in their account. Since loan facilities are hugely time-sensitive, the repayment period starts from the following month after disbursal. Based on the borrower’s preferred repayment method, the loan provider communicates a detailed repayment plan. This lets borrowers manage their finances and start EMI payments as per schedule.
How Does the Repayment Work?
Financial institutions use various methods to loan repayment plans depending on the borrowers’ needs. The interest rate policy, repayment tenure, and loan purpose also affect the EMIs. Listed below are some common repayment options that most lending institutions accept:
EMIs or Equated Monthly Instalments
Lending institutions use EMI options to accept loan repayments. That means borrowers must pay the loan through a series of regular monthly payments. Each EMI includes a part of both the interest and principal amounts. Each month, the borrower pays a pre-fixed EMI on a particular date until the term ends. The interest on the outstanding principal amount keeps accumulating over the repayment tenure every month.
The bullet repayment method requires borrowers to pay only the interest on the principal during the loan duration. They pay the principal amount in a single payment at the loan term-end. Popularly known as the interest-only loan, it has a fixed term for complete loan repayment. However, this repayment option depends on the lending institution.
Although the method does not repay the existing loan, it restructures the debt by transferring the current loan’s outstanding amount to a different lending institution. The aim is to secure a better loan plan with another financier offering a lower interest rate or better customer service.
Borrowers can prepay their loan before the loan term ends. They can use surplus funds to close their loan sooner if they get some excess. However, prepayment requires some charges that vary from one lending institution to another.
ECS or Electronic Clearance Service
ECS is the process of repaying a loan directly from the account. The borrower permits the lending institution to debit the EMI amount on the due date.
Useful Tips for Efficient Loan Repayment
Here are the top methods to repay an instant business loan faster and simultaneously enhance the business’s reputation and creditworthiness:
- Make Part-Payments: In addition to paying the scheduled EMI each month, borrowers need to use the extra income to make part-payments and pay off the loan faster. Lending institutions may charge a nominal prepayment fee. It will certainly help repay the loan quicker and save money on the interest cost.
- Increase the EMI at Regular Intervals: Cutting down expenses and increasing income sources can generate more disposable income, which borrowers can use to increase their EMI payments at regular intervals. A business loan EMI calculator helps plan the EMI amount conveniently.
- Set Up Autopay: The AutoPay feature ensures the borrower never misses on the EMI repayments, thus saving from penalties. Some lending institutions may offer discounted interest rates if the borrower repays through the AutoPay feature.
- Establish a Trustable Relationship with the NBFC: Repaying the EMIs on time and maintaining regular communication helps establish a good relationship with the NBFC. It increases the borrower’s credibility and enhances loan terms over time. Moreover, the lending institution offers different discounts from time to time and can lend more loans easily in the future.
Several lending institutions offer unsecured business loans in India with attractive interest rates. Aspiring borrowers can apply for an instant Business Loan online and verify their KYC details quickly. With multiple and flexible repayment options, the EMIs do not become a burden on the borrower’s finances and fulfil their capital requirement.
About the Author
Amaira Sharma is finance expert and former business growth strategist who has more than 8+ years experience in the industry, now she helps others to get better financial stability and standards. She loves to write useful tips on personal finance and businesses.