May 25, 2024

Commercial loans are the first method to be applied by SMEs who are short of cash. Among the applications of SMEs to this method are; paying off debt, growing a business, or regulating the company’s cash flow. Getting an SME loan is based on a long research and application process. So, what should be considered during this process?

1) Interest Rates

Before taking a commercial loan, you should look at the interest rates and additional costs that may vary in each financial institution. Encountering expenses for which you are not prepared can upset your plans. Loans advertised as interest-free or no-fee also incur costs and you should compare them with other options. To make the comparison in a healthy way; you should consider the total amount you will pay until the end of the maturity, together with the cost of the file. You can find detailed information about commercial loan interest rates in 2020 here .

2) Maturity Period

By looking at the total repayment amount, do not be mistaken that short-term loans are more advantageous. Instead of thinking, “How much will I pay for the interest?”, you should focus on meeting the payment plan. If you delay the payment, it will badly affect your credit score. You can find out how the loan interest rates change according to the maturity by using loan calculation tools. You can learn about the best loan calculator tools here .

3) Corporate credit rating

The first thing that financial institutions look at when evaluating loan applications is the credit rating. The higher your credit score, the more likely your application will be successful. It is very important that the payments in the past periods have been made regularly. In addition to your credit rating, the balance sheet and other financial statements are also taken into consideration.

4) Credit Amount

If you apply for a loan that is much higher than your income, your application will most likely be negative. If your commercial loan application is rejected, you must wait 1 year before you can apply again. By applying for a loan in more reasonable amounts, you can ensure that your loan application is positive.

5) Credit Markets

Before using a loan, you should consider the general economic situation in the world. By anticipating the change in loan interest rates, you can make your plans accordingly. It will be more advantageous for you to use loans in periods where low interest rates are applied to loans. In some cases, credit structuring may be more advantageous. That’s why you should continue to monitor interest rates after you use a loan.

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