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How to Manage Business Loans after Coronavirus Slowdown ?

Highlights

  • Tips to Manage all the Business Loan Activities after Coronavirus Slowdown.
  • Try to make the Prepayment of the Lon by saving the day to day expenses during Lockdowns.
  • Avoid taking further loans for your business because it might increase your financial crises.

The Corona Virus Outbreak has slowdown the whole world economy including the Indian Economy. Many businessmen are in losses and they are unable to manage business loans after Coronavirus Slowdown. All the business activities have been stopped due to the lockdown and thus resulting in the financial crisis for the businessmen. All the businessmen having an existing business loan are worried about it because of the financial crisis as it has become really difficult for them to manage the Business Loan. So, you can see some of the techniques that might help you to manage your business loan during the Covid-19 Crisis.

Manage Business Loans during Covid-19 Crisis

  • You must not take an additional business loans for your business as it willcreate a financial burden on you and on your business.
  • Try to save more from the unnecessary expenditure and utilize them in theprepayment of business loans.
  • Try to save more from the unnecessary expenditure and utilize them in theprepayment of business loans.
  • Make use of online platforms like Net Banking and Mobile Application to manageall the activities related to the business loan and avoid direct contact.
  • Take the top-up business loan only when it is very urgent otherwise avoid taking a business loan top-up because it will create a financial burden on you.
  • Make a Balance transfer of all other business loans on one business loan that has the lowest rate of interest.
  • Use the saving from travel expenses, dining expenses, and entertainmentexpenses for the prepayment of the business loan.

If you are having an existing business loan then definitely you are paying the EMI on it. But you must look for a way out to manage the loan in this Covid-19 crisis. So here are some of the measures that might help you to manage the business loan easily.

Avoid Taking Further Loan

Everyone is facing the financial crisis either they are the businessmen or the corporate employee due to the Coronavirus Outbreak. So, businesses with an existing business loan must avoid taking further loans for their business. It might have a more negative impact on the financial condition of the business as the liability increases with loans.

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As per the government orders, most of the cities are lockdown and businesses are unable to generate the revenue. Therefore, in such circumstances, it would be not easy for you to afford the EMI and Interest of another business loan. So you must avoid taking further loans and smartly manage the existing business loan.

Opt Cost Cutting Program

You must watch your monthly expenses done on business activities. If you have a shop then you can save from your petty expenses like commuting to shop, tea served to the customers and many other expenses. You are saving these expenses during the lockdown, so it might help you to manage your business loan. You can increase your EMIs by adding these savings from the petty expenses.

On the other hand, you can save your personal commuting expenses and use them for clearing the loan. Smart management of your personal funds will automatically help you to manage your Business Loans.

Try not to get Panic due to the Covid-19 Outbreak and don’t start hoarding necessary items for yourself. There are two disadvantages of hoarding necessary items during such a crisis. Firstly, it needs a lot of funds and your financial position will get affected and secondly the needy people will not be able to buy the necessary items once you hoard them.

Give Standing Instruction for EMI Deduction

There are some businessmen who don’t take the business loan EMIs on a priority basis. They just skip the EMI of some months. But this activity not only decreases your Cibil Score but also makes you incapable to take a business loan in the future. Therefore giving standing instructions for EMI deduction will help you to repay the EMIs on time.

In the standing instructions, you have to specify a particular date on which the bank will deduct the EMI from your account. You must avoid visiting the branches in order to keep social distance and preventing Coronavirus from spreading. Your EMI will get deducted automatically once you give the standing instruction to the bank.

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Choose Online Banking

Make use of online banking services to avoid social contacting because this virus only spreads with direct contact. Choose your EMI plans or increase it through the net banking or mobile application instead of visiting the branch for giving instructions.

Online banking services give you the facility to manage all the banking activities online. You can manage your business loan from the Net Banking Services or the Mobile Application of the respective bank without getting into the direct contact of the bank’s employees.

Use Top-Up when Needed

You must only take a top-up loan on the existing business loan if you have this as the last option. The top-up loan might help you to pay off your creditor’s debt and clear some other liabilities of your business. On the other hand, these top-up loans will create a financial burden on you to pay the EMIs. This facility has both a negative and positive impact on your business.

So before taking a business top-up loan, you must analyze your business’s financial position. The State Bank of India has also introduced the Covid-19 Emergency Credit Line that might be helpful for the existing loan takers of SBI. This facility will help you to take another loan from SBI for 12 months only.

Close Others Loans through Balance Transfer

If you have taken multiple Business Loans from various financial institutions then you must close all other loans. Either you can pay off all the other loans or you can do a balance transfer of other business loans on a single loan. Clearing all the loans will be quite difficult so you must do the balance transfer of all those loans.

Some individuals also have a personal loan as an addition to the business loan. So in case of the personal loan, you can’t do a balance transfer of it on a business loan. Therefore it is better to close the loan to remove the burden. You can manage your business loan like this after the Coronavirus Slowdown.

Try to Clear the Existing Business Loan

If you have enough funds as savings that you can clear the remaining amount of the loan, then immediately repay the loan because it will reduce the amount of interest. The amount of interest will increase if you delay in the repayment of the loan. 

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If in case you don’t have enough funds to clear the loan at once then you must increase your EMI. Paying more EMI than the calculated one will reduce your amount of interest up to some extent and you can invest that amount into your business once the Coronavirus Crisis ends.

Expenses that are Saved During Lockdown

There are some expenses that you are saving during the lockdown period. So you can utilize these funds in the prepayment of the existing business loans and get rid of the extra interest.

Traveling Expenses:- Nowadays the Indian Government has temporarily banned the flights, trains and local cabs and metros just to boost the social distancing. So, you are saving all your travel expenses and you can use it in prepaying the existing business loan.

Dining Expenses:- The government of India has also closed all the restaurants, Pubs, Bars and lounges to prevent people from getting into direct contact with each other. So, you can utilize your savings from the dining expenses to clear the loan before time and manage your business loan smartly.

Entertainment Expenses:- All the movie theaters have been shut down as per the government orders so all your entertainment expenses on weekends are being saved by you. Try to make the prepayment of the business loan EMI using the savings from the entertainment expenses.

Other Social Expenses:- If you are a fitness freak then during lockdown all your Gym Fees, Aerobic Classes Fee, Swimming fees, and all other fees are cut off. So, you have the option to compensate for the business loss using those funds and manage the running business loan easily after the Coronavirus Slowdown.

Conclusion

Social Distancing isthe most important cure of the Coronavirus and once you stop it, you can easilycontinue your day to day activities. But during the Coronavirus Slowdown, youmust try the above measure in order to manage business loans effectively. Allthe above measures will definitely help you bring your business back on trackand manage all the activities related to the business loan. It shall hardlytake 1-2 months more to completely get rid of the Covid-19 Disease and afterthat, you can get back to your regular schedule.

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Personal Loan Interest Rates July 2020
Fullerton India14.00% - 33.00%
HDFC Bank10.75% - 21.45%
ICICI Bank10.99% - 18.49%
IndusInd Bank11.25%
Kotak Bank10.99% - 20.99%
RBL17.50% - 24.00%
Standard Chartered Bank11.50% - 18.00%
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Axis Bank7.75% - 8.55%
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Citibank8.20%
HDFC6.95% - 8.00%
ICICI Bank7.45% - 8.55%
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Tata Capital9.20% - 9.35%