A business loan contract is nothing more than just a text. This paper plays a very significant role in your business loan’s entire tenure. This relevance is due to the details and information alluded to in that specific text.
All the specifics of your business loan that you are going to opt for are in a company loan agreement. Before signing it, verifying and being clear on each and every clause and terms involved in the agreement is an absolute must. You can create serious problems in the future by not being aware of it.
It may also happen that you will not be able to grasp it properly, even after reading it. You should go to a lawyer in this instance and ask them to assist you with your business loan agreement. You need to be a lot more vigilant to make sure that you are aware of all the items listed in your loan agreement. Just sign when you are certain and sure!
Important Terms Regarding Business Loan Agreement
- Loan Amount
To ensure that you are signed in to borrow the specific amount, review the loan amount. In certain cases, lenders are prepared to provide you with the amount you want, but as per their convenience, they change it on records. While it is still uncommon, one should be mindful of these aspects and should read the agreement carefully before it is signed.
One of the significant items that is stated in your loan agreement is the APR of the loan. Basically, APR calculates how much each year your loan will cost you, or the amount you will repay in total. In this, the business loan interest rate & fees paid are included.
So this point of your business loan agreement is very important to remember. Even a slight difference could end up costing you more in your business loan APR.
- Penalty on Prepayment
When you repay your loan before the time period specified in the loan agreement, most lenders charge a prepayment penalty. So, is it really important to verify whether your loan comes with a penalty for prepayment or not? If it’s yes! The next significant thing is understanding how much you will be paying. So, before you sign your business loan agreement, it is an important fact to remember and to recognize.
- Penalty Fees
In the event of any default in paying the business loan EMI, interest charges are one that you must pay on top of your EMI. It varies from lender to lender and to assess this there are clear requirements. It will happen that you may not have enough money to pay the EMI for your loan during the entire tenure. In such a scenario, in the event of default, you should know precisely how much you will pay for the penalty charge. If it’s too much, it’s a smart idea to arrange cash from some temporary source and pay your EMI. For further information, you can check business loan EMI calculators online.
In the case of fees, be sure to review your business loan agreement, and then see how much you will be paying.
- Form of Rate of Interest
It can be fixed or floating, with specifics of what form of interest you are going to pay in the business loan agreement. It can happen that you have no idea whatsoever and you sign the agreement. Being unaware of this will influence the entire cost of your loan, so be wise and look for this information in your loan agreement. Don’t hesitate to ask your lender if you have a question.
It is important to choose a quality lender if you are thinking of taking out a business loan. Features like flexible tenure for repayment, low business loan interest rates, a swap option for the loan balance, and other top-up options can go a long way.