How to Secure Low Interest Loan

Secure low interest loan

Securing loans to run your business can be a daunting task. Businesses at most times need funds to be better organized and deliver more results, and the matter is that most owners of business do not have the funds to fully establish and run their businesses. Thus, the owners of these businesses would have to look at the possibility of getting loans to run them. The issue then is how do you secure low interest loan as a business owner?

The loans available to business owners are usually high interest loans. Imagine when you are running a business that the profit margin in the business is not impressive and it is very limited. Then, it becomes a foolish decision to take loans from a high interest loan giving institution. You would simply be doing business for the institution you secured the loan from as all of your profits would be going to repaying the loan and the interest it accrues.

Thus, your top consideration should be how to get low interest loan and not just any form of loan. You have to put your business into consideration and evaluate how your business would gain from the loan you are seeking. You should not just go seeking loans without considering some factors. These factors are important in determining your success in your quest to get low interest loan and the kind of credit institutions you should approach for such loans. However, firstly, you have to understand what low interest loan is.  

What is Low Interest Loan?

Loans are funds offered to people, organizations and businesses to use in uplifting or facilitating their businesses processes, and they’re required to repay these loans with different interest rates. What this means is that if you’re offered 100,000 naira as loan to expand your business with 30% interest rate in 6 months. After 6 months, you’re paying 130,000 naira to the loan givers.

Low interest loans are loans offered to people to begin or expand their businesses with low interest like 2% to 5% in 6 months as compared to 10% or even as high as 20% of some loans. This one is subsidized maybe because of the reason or purpose you’re getting the loan or the goal and objective of the loan givers. Knowing what low interest loan is would help you know how do you secure low interest loan.

Financial Institutions that offer Low Interest Loans

  • Government Agencies and Banks
  • Non-governmental Organizations/Charities
  • Credit Unions
  • Development Unions
  • Trade Unions
  • Community banks
  • Commercial banks (as promo or as directed by Government bank)
  • World Bank

What to consider before securing Low Interest Loans?

You should note that a wide range of credit institutions offer low interest loans, from government bodies to non-government organizations, and the success of securing these loans depends on factors we’ve listed below in conjunction with your manner of approach and application. There is not too much restrictions to what kind of credit institutions you can secure low interest loan from. Your main preoccupation should be about meeting up to the factors listed below and your manner of approach.

These factors listed are beneficial in guiding you on  how do you secure low interest loan.

  • Credit Score and Background: This is the foremost factor or quality you should check as you apply for low interest loan in any credit institution. How good is your credit score and background? How well and how fast do you repay loans and debts? This is the first factor that most institutions check before they hand out loans to any business owner. The case is more severe with low interest loan providers as they scrutinize it better to determine your ability, willingness and speed of repaying loans.
  • Profitable Business: How profitable your business is is also another factor used in determining the worth of handing out this loan to you. Since the loan is a low interest loan, the time frame given to you is usually shorter than the ones of other loans except in the cases of the ones provided by government or NGOs. Thus, your business has to be the kind that makes quick returns to be able to qualify for these loans.
  • Good Business Structure: The credit institution usually check how well you run your business before they hand out their money as loan to you. What is your business structure? How well is your business run in terms of the operation? How are your accounting books and the management structure? These institutions check all these, especially in the aspect of your accounting books, the profit and loss statements, the cash flow and some other features of your company that would be checked.
  • Network: You also should possess good network of business colleagues and friends to be able to have access to some of these institutions and some rare opportunities. This is the reason why people encouraged to flow with the right crowd to be able to get the opportunities that are right for them. These colleagues would definitely be of help in connecting you to the right source for low interest loans.
  • Business Plan: How flawless your business plan is would determine how fast you would be handed the loan. For a business that is new and making vital sales, your business plans might be requested by an angel investor or NGO to know how good your plans are and how realizable. Thus, while planning on the business, you should endeavor to have a good business plan.
  • Tax Payment: There should be a good line of tax payment to be able to qualify for government loans and bailouts. As a business owner, you should make sure you meet up with the required tax payment plans for your business. If your business does not meet up with its tax payment, your business might be likely ignored if government is offering low interest loans or bailouts to businesses.
  • Benefiting Collateral: In case you are seeking low interest loans from institutions that require property collateral, then you should have the collateral benefiting to the loan amount you request for. The collateral you provide should be enough to stand in for the money you collect as loan in case you default in returning the loan. These institutions won’t hand you the loan if you don’t have the benefiting collateral.
  • Member of a Credit Union: Membership of a credit union is necessary if you are a business owner. Credit unions serve as organizations where as a business owner or as an individual in need you can apply for loan and get it offered to at low interest. However, these unions equally charge monthly deposits but it is balanced compared to the low interest loans that are offered. They are life savers for most small medium enterprises that cannot handle the high interest rates of most credit institutions.
  • Information: A young or starting business owner should be a good sucker of information about business. Thus, you should utilize all sources of information and stay close to them. The source of information that should be very important to you is the one of how to obtain low interest loans from some credit institutions. This is good because it will definitely save you from the problem of funding. Once you have good fund, running your business won’t be a problem.
  • Free from Crime and Corruption: Your business should be free from crime, illegal activities and corruption to be able to secure low interest loan from any institution. If your business is engaged in illegal activities, it is more likely that your appeal for low interest loans will be denied especially by government and NGO bodies. Generally, you would be rejected. Banks, for instance, would not want to be sanctioned by the government for assisting a government for assisting a business immersed in an illegal business.

You should endeavor that you meet all or majority of these requirement to be able to know how do you secure low interest loan.

Conclusion

Once you meet the requirement, then you get your necessary papers ready, be prepared and know what to say as well as carrying yourself in the proper way. Securing low interest loan is not a hard task. Make research on the best low interest loans around you suitable for your kind of business and go for them. Be meticulous with your paper work and follow the process through.

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