What Impacts the Interest Rate?
Interest rates are one of the major deciding factors for applying for a loan for business. Proper research and better knowledge can help in opting for the best business loan that can fulfil all your business requirements and that too in your budget.
Let’s now take a look at the factors that affect unsecured business loan interest rates:
- Credit History: it is a critical factor that is considered while deciding the interest rate for a particular application. The credit record must verify that you have never defaulted on a loan and you pay your EMIs and credit card bills on time. All loan lenders review the credit report and score before approving loan applications. So, the better the credit score, the better are the chances of getting lower than average business loan interest rates.
- Business Vintage: fully established businesses with a proven record of handling loans and credit are considered more trustworthy than the new businesses. A proved business vintage provides the loan lender with a sense of security which leads to lower small business loan interest rates.
- Business Type: some business industries are considered risky than others. In such cases, notwithstanding the number of loans you have availed and paid on time in the past, the nature and industry of your business will get you higher interest rates.
- Revenue: positive monthly revenue points towards the unlikeness of default payments. Consistency in business revenues and healthy business financials are important requirements, and hence, low-interest small business loans can be availed.
Learn how to calculate business loan interest rates