How to Manage Your Business Finance EMI Payments


Obtaining business finance is often necessary for organizations in order to take care of expansion or consolidation requirements. While there are a wide range of options to get small business financing is concerned, managing small business loans is of utmost importance for companies. Your EMI payments should be carefully managed.

Here are some tips that you can always consider-

Keep your lender informed

Your financial institution should always be aware about your business turnover, profits/losses and other developments. Your lender should always have adequate information so that you do not run into trouble later on.

Never skip EMI payments

Skipping EMI payments will lead to a poorer credit score and will run up penalties as well. You should repay your business finance EMI in a disciplined manner without skipping the same. In cases where the entire EMI amount cannot be arranged by you for that particular month, contact the lender in advance and zero in on the minimum balance payable. This will help in keeping the relationship with the lender and your credit history intact.

Avoid Late Payments

Late Payments are another bane for most businesses. If you are going to apply for quick business loans, remember that you should pay the EMIs on or before the due date. This will boost your credit score. Late payments will be a pain point for the lender, it will lead to extra charges and will also lower your credit score.

Pre-Pay your Loan

Whenever you have any added funds or bonuses, try and pre-pay your loan amount as much as you can. Reducing the loan in this manner will help you save more on interest and you will have to pay lower EMIs every month as a result. The loan will be completed in quicker time.

Keep EMIs unchanged

Another way is to pre-pay your loan and also keep the EMI amount unchanged. This way, you will be reducing your business loan from both ends.

Check the interest rates

If your business loan interest rate seems higher and this is eating into your monthly budgets, compare this with other financial institutions offering lower rates of interest. If you find the right interest rate and favorable terms and conditions, you can switch your business loan to another lender in order to lower the monthly EMI by way of reduced interest.

Do not pile on debt

If you already have a business loan to repay, avoid taking on fresh debt. You do not want to be in a situation where you have to spend most of your monthly income on repaying business loans and other debt. Stay away from taking on new debt before the business loan is repaid. You should be disciplined enough to repay the business loan before the scheduled tenor. You should look for ways and means to pre-pay the loan quickly through careful money management and increased revenues of your business.

Have a monthly budget in place

Having a monthly expenditure budget of your business will help you prioritize EMI repayments. Make sure that the money for EMI repayments is not compromised due to other unnecessary expenses/overheads.

Build an emergency corpus

With some deft financial planning, you can build up a monthly corpus that is equivalent to twice/thrice your EMI amount. This can be even more if possible. This will help you stay on track without any delays.