Are you worried about how to repay business loans fast and the thought is weighing you down? If yes, then this article is for you.
The article will discuss the top 6 methods you can use to repay business loans faster that will also enhance your business’s creditworthiness and reputation.
1. Make Part-Payments:
Rather than paying business loan EMI once a month, you can use any extra income you get to pay off your debt faster. The lender will charge you a fee for this, but it would certainly help you repay your loan faster.
Please note that this option is usually only available for secured loans. If you have an unsecured business loan, speak with your lender to understand the terms for part payments.
2. Increase your EMI Percentage at Regular Intervals:
If you think you can manage it by cutting your expenses or increasing your income, you can speak to your lender and increase the EMI payment by a certain percentage. Again, the feasibility of this solution will completely depend on your lender’s policies as well as the type of business loan you have taken.
The advantage here is that you will be able to repay the business loan quicker. Use the business loan EMI calculator to plan your EMI amount and tenure conveniently.
3. Consider Refinancing your Business Loan:
If you can find a better deal and low business loan interest rates from another financial institution, you can consider applying for a balance transfer of your business loan. However, before going for refinancing, always check the feasibility or the total benefits you will get to refinance your existing business loan. Most lenders allow borrowers to foreclose a loan only after a certain number of EMIs have been paid, and may even charge a fee on the outstanding principal amount. Moreover, the new lender will charge you processing and administration fees - it would be wise to take into account the total cost before opting for the balance transfer.
Must Read: How to Apply for a Business Loan Online?
4. Set up Autopay for Business Loan EMI Payments:
The autopay feature will not help you directly to repay business loans faster, but it ensures you never miss on the EMI payments, thus saving you from penalties.
Also, some financial institutions offer a discount on interest rates, when you pay through the autopay feature.
5. Establish a Good Working Relationship with the Lender:
It is the most undervalued point in the banking industry and borrowers often ignore establishing a good working relationship with the lender.
The process to establish a good working relationship with the lender involves repaying all EMIs on time and communicating on a regular basis. It helps to increase your credibility and improves the chances of getting good terms on the loan. Also, the lender helps you with taking advantage of different discount offers that may be available from time to time.
6. Be Prudent while Borrowing:
Don’t overborrow, as it will impact your repayment schedule and if not managed properly or you default on the repayments, it can lead to long term repercussions.
Therefore, it is essential to borrow the amount that you can repay easily without hurting your business cash flows much. Also, during repayments, avoid unnecessary escalation of operating costs that can impact your repayment capacity. Optimize your resources and constantly work on early repayment of the business loan.