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Long Term Business Loan : Interest Rate & Eligibilty

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As an entrepreneur, you need consistent cash flow to ensure smooth business operations. However, insufficient funds can sometimes lead to a business's downfall. A long-term Business Loan is the preferred financing option that makes it easier for entrepreneurs to obtain the required funding. These loans offer the necessary cash a business needs at competitive interest rates and flexible repayment tenures without collateral. Let’s find out more about long-term Business Loans in this article.

What are Long-Term Business Loans?

Compared to short-term Business Loans, borrowers choose long-term loans since they have larger loan amounts and more extended payback terms. Terms can last up to 5 years, depending on the firm's demands and the lender's discretion.

Financial institutions may charge either a fixed or fluctuating interest rate for these long-term Business Loans. Although it is generally lower than the interest on short-term loans, resulting in reduced monthly payments. Business firms must additionally pay processing fees and other extra costs, which vary from one lender to another, in addition to the interest.

Features and Benefits of Long-Term Business Loans

Long-term loans are deliberate decisions. These scheduled borrowings have a longer loan repayment tenure. Here is a list of the primary features and benefits of a long-term:

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Flexi Loan Facility

Long-term Business Loans often have lower interest rates. Since the total is spread over a longer period, they typically have lower monthly payments. As a result, you can adequately manage debt payments.

Flexible Repayment Tenure

The borrower has the choice that best meets their needs through a flexible repayment plan. In essence, it lessens the burden of the EMI and the likelihood of default.

No Collateral

You do not need collateral. Lenders can approve long-term small Business Loans based on a borrower's creditworthiness.

Online Access

You can apply online and get quick approval through an easy loan process.

Purpose of a Long-term Business Loan

Business Loans are ideal for borrowers needing larger loan amounts for an extended repayment term. Thanks to long-term loans, businesses find it easier to repay the loan amount due to manageable EMIs. Established companies with a solid financial history are more likely to be approved for long-term Business Loans. The max repayment period is five years. The following are some of the reasons business owners prefer long-term loans:

  • Acquisition of assets

  • Purchasing a piece of land, an office block, or other commercial property

  • Capacity expansion

  • Launching a new product or service

  • Buying new equipment or commercial vehicle

  • Upgrading office infrastructure 

  • Recruiting new talent to expand the workforce 

Long-Term Business Loan Interest Rates and Charges

Before applying for a long-term loan, you should thoroughly understand the various charges, such as processing fees, interest rates, and any other fees that affect your borrowing cost. Let's examine long-term Business Loan interest rates in greater detail:

Interest Rate

15-30%

Processing Fees

Up to 2.50% of the loan amount

Bounce Charges or Dishonour Charges

Rs. 700/- (Per Instrument)

Mandate Rejection Service Charge

NIL

Document Processing Charges

Documentation Charges (including Stamp Duty charges) -

Loan Amount up to Rs 5.99 Lakh: Rs 2,000 + GST

Loan Amount >= Rs 6 Lakh: Rs 7,000 + GST

Foreclosure Charges

Foreclosure is not allowed within 12 months from the disbursal date. After 12 months till loan closure, a Foreclosure penalty of 4% plus applicable taxes.

Loan Cancellation Charges

Rs. 15000/- towards loan cancellation or interest from the date of disbursal till the date of loan cancellation (whichever is higher).

Payment Instrument Swapping

Rs. 2,000/- + Applicable Taxes

Eligibility Criteria for a Long-Term Business Loan

Those who fulfil the following criteria may apply for a small Business Loans for the long-term:

  • Business owners, self-employed people, partnership businesses, and private limited companies engaged in the manufacturing, trading, or service industries.

  • People with at least three years of expertise in the current industry and five years of overall business experience.

  • At the time of loan application, the applicant must be at least 25 years old, and at the time of loan maturity, they cannot be older than 65.

  • Those whose businesses have generated profits during the past 2-3 years.

Documents Required for a Loan Term Business Loan Application

Every lender requires the following documents to provide the best long-term Business Loans.

  • Duly filled application form 

  • Passport-size photograph

  • KYC documents 

  • Annual returns of the business 

  • Business registration details

How to Apply for a Long-Term Business Loan?

You can apply for a long-term Business Loan on the Hero FinCorp website by following a few simple steps:

  • Click the "Apply Now" button on our website's unsecured Business Loan page.

  • Complete the online application form and verify your mobile number with OTP.

  • Enter the business loan details.

  • Provide additional information as part of the application form and submit it.

  • You will get a reference number for further processes.  

  • Once verified, you will receive a loan offer with the approved loan amount and applicable interest rate.

  • Accept the loan offer to get a quick disbursal to your account.

Conclusion

Long-term Business Loans are designed to help entrepreneurs get the required funding for any business-related expense – planned or unplanned. We at Hero FinCorp offer collateral-free Business Loans of up to Rs 40 lakh at reasonable interest rates and flexible repayment tenures of up to 5 years. Before applying for long-term Business Loans, it is advisable to consider your company's financial status. Business Loans can provide the required funding to expand your company and profit from the market. Don’t forget to use our easy-to-use EMI calculator to calculate EMIs for your long-term Business Loans before making the borrowing decision.

FAQ

What is the maximum term for a Business Loan?

The typical long-term Business Loan has a maximum 5-year repayment period. Borrowers can choose a suitable tenure using an EMI calculator online.

Who gives long-term loans?

Top lending institutions like Hero FinCorp offer eligible business owners long-term Business Loans at a very reasonable interest rate. 

What are the disadvantages of long-term loans?

The impact on your monthly cash flow of a long-term loan is one of its main disadvantages. The loan size determines how much you must pay back each month. Therefore, it is advisable only to obtain long-term loans in emergencies.

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