Loans often get a bad reputation due to perceived negatives like high interest rates and the potential for debt accumulation. However, when chosen and used wisely, a business loan can be a powerful tool that you can leverage to drive growth for your business. It can help you expand your operations, purchase needed equipment, or manage your cash flow effectively.
Securing better loan terms—such as lower interest rates, flexible repayment schedules, and minimal fees—can significantly benefit your business by reducing financial strain and improving profitability. Sometimes, this can be as easy as choosing the right loan product in the first place. Maya Flexi Loan, for example, allows you to unlock as much as PHP 2 million in funding while dealing with borrower-friendly interest rates and fees. In other cases, however, the key to obtaining these favorable terms lies in strategic planning and more proactive relationship management with your partner bank. To that end, here are six ways to achieve better loan terms even before you need them for your business.
1. Maintain a Good Credit Score
Your credit score is one of the first things banks look at when evaluating loan applications. With a high credit score, you can open doors to better loan terms, including lower interest rates.
To maintain a good credit score, make sure you pay your bills on time, keep your credit card balances low, and avoid opening too many new credit accounts at once. Furthermore, regularly review your credit report from the Credit Information Corporation for any errors and address them promptly. Remember, a strong credit score reflects on your reliability as a borrower and can significantly influence the terms of your business banking loan.
2. Demonstrate Stable Income
Banks want to see that your business generates a stable and consistent income. This reassures them that you have the means to repay the loan.
To demonstrate a stable income, be ready with your financial documents. Always have your profit and loss statements, balance sheets, and cash flow statements filed and updated. These documents should reflect consistent revenue growth and sound financial health. Additionally, a history of steady income can be a powerful negotiating tool to achieve more favorable loan terms.
3. Manage Debt-to-Income Ratio
Your debt-to-income ratio (DTI) is a key indicator of your financial health. It compares your monthly debt payments to your monthly income. A lower DTI ratio suggests that you have a good balance between debt and income, making you a lower risk to lenders.
According to most sources, a DTI ratio of 36 percent or less indicates a financially healthy business. It means that you have enough income to cover your debts, build up savings, and invest in growth opportunities. In short, this helps in making lenders see your business as a safe bet, worthy of a credit line.
To improve your DTI ratio, focus on increasing your income and paying existing debts. This not only makes you a more attractive borrower, but it can also lead to more advantageous terms for your business.
4. Develop a History and Relationship with Your Bank
Building a long-term relationship with your bank can pay off when it comes to securing loan terms. Whether you partner with a commercial bank or a digital bank like Maya, they will be more likely to offer favorable terms to businesses they know and trust.
Start by opening a business account. With a Maya Business Deposit, for instance, you can take advantage of perks such as a zero-maintaining balance, a generous 2.5 percent interest rate per annum, and free money transfers via PESONet and InstaPay. Best of all, you can apply for a Maya Flexi Loan and have the net loan proceeds conveniently deposited into your Maya Business Deposit account.
You can boost your Maya Flexi Loan’s credit limit, which can reach up to PHP 2 million, by simply using Maya Business products such as the Maya Payment Links and Maya Checkout if you have an e-commerce business. For businesses with physical stores, you can upgrade your checkout counters with Maya Terminal POS devices. These are all-in-one payment terminals that accept card payments as well as digital payments via QR Ph and e-wallets. With Maya Business, you not only improve your loan terms but also upgrade your business’s customer experience.
5. Maintain Regular Communication with Your Bank
To strengthen your partnership, you need to regularly communicate with your bank. Keep them informed about your business’s progress, financial health, and any significant developments. Moreover, move away from small talk and have real and honest conversations about your business. What are you struggling with that the bank can help you with? What are your business’s latest acquisitions or success stories?
Keep your business top of mind with your banking partner by maintaining a healthy dialogue with your loan officer. With a strong business relationship, your banking partner may even become more amenable to your preferred terms when the time to negotiate comes again.
6. Showcase Your Business’s Development Potential
Banks are more likely to offer favorable loan terms to businesses that show growth potential. In your reports, highlight your business achievements and development plans. This could include expanding your product line, entering new markets, or achieving significant milestones.
By showcasing your business development, you demonstrate to the bank that your business is thriving and poised for future success. This reduces the perceived risk for the bank and can help in securing better loan terms.
Get the Most Favorable Loan Terms for Your Business with Maya Flexi Loan
To access Maya Flexi Loan’s line of credit, the first step is for you to sign up for Maya Business. This account opens up vital opportunities for your business, including business banking loans with minimal fees, flexible terms, and fast approval.
Signing up for a Maya Business account allows you to open a Maya Business Deposit account and use it as your settlement account. With an industry-leading 2.5% per annum interest rate, you’ll earn PHP 25,000 in interest per year on a PHP 1 million deposit. In addition, you will be able to send money to your partners and suppliers for free via InstaPay and PESONet. This means more savings for your business.
Another benefit of signing up is that it qualifies you for a no-collateral Maya Flexi Loan offer of up to PHP 2 million in just 3 months, allowing you to have additional capital to seize opportunities and grow your business. Just use Maya as your primary processor for all wallet and card payments. The more you use our solutions, the better the loan offer will be.
Sign up for Maya Business today, and apply for a business-friendly Maya Flexi Loan.
