Questions to ask before switching to another business loan lender

Applying for a business loan can be stressful, especially when you don’t have the correct lender. As
important as it is to ensure that you compare every business loan based on the rates, tenure and
other conditions, it’s equally important to weigh down the pros and cons of the lender you intend to
deal with before selecting one. However, if you have already agreed upon a lender, make sure you
ask the following questions and if need be, switch your lender.

• Is your lender offering instant finance?

In this age of rapid development and corporatization, there is hardly any time you can spare to
ensure that your business finance is being availed. Moreover, if you get into ties with the
conventional loan provider, you will be stuck into the pits of a lengthy and elongated loan
application and procedure. To avoid that, if you have an unconventional lending alternative offered
by fintech companies who offers to provide the business funding in the form of instant loans where
the sanction and disbursal can be completed within seven business days, it’s wise to switch your
lender.

• Does your lender offer collateral-free loans?

When you apply for a small business loan, chances are you don’t have a valuable asset to offer as
collateral. However, if you lender demands security against the loan amount and even determines
the loan amount to be disbursed based on the value of the asset, you can switch to collateral-free
loans offered by fintech companies.

• Does your lender demand excessive documentation?

The highlight of traditional lenders is demanding a new document every visit until you drown into a
pile of documents. However, if you can deal with a lender who offers extremely nominal
documentation which you are only required to upload rather than submit physically, you can change
your lenders from banks to fintech companies.

• Is the procedure to avail business loans simpler?

Visiting banks daily for long hours until your application is approved is a drearily tiring activity.
Therefore, if you can avail a loan at the tip of your fingers where the entire pre-assessment,
application, sanction, disbursal and e-agreement procedures take place online through the fintech
companies, you should switch your lenders from traditional to digital.

• Does your lender offer small-scaled loans?

Considering your SMEs and micro businesses, your financial requirements are minimal. When it
comes to business funding, traditional lenders tend to incline more towards the larger amounts as it
poses less risk. You can always opt for fintech companies offering micro loans for every short term
and amount requirement. If your lenders cannot fulfil your micro-scaled funding needs, it’s wise to
switch to a lender who can.

• Does your lender offer multiple financial instruments?

A business loan is not the only alternative at your discretion. You can opt for a working capital loan,
equipment loan, project finance based on the financial motive of your organisation. Fintech
companies are known for offering multiple loaning policies for the borrowers to select from based
on their financial needs.

Conclusion

Acquiring business loans in India is a significant process for any borrower which needs to be gone
through meticulously after comprehending every aspect of your business, its financial capabilities
and structure along with the lender you select.