Often, we hear our friends say, “I just took the loan from the bank that gave the lowest rate. How does anything else matter?”. While no one can deny that interest rate is a very important factor in choosing your lender, If you think about it more deeply, there are several other considerations that you may want to keep in mind. Any business partnership is essentially a long term one, and finance relationships are no exception.

While choosing your financier, it may help to ascertain the following factors:

  • Do the lender’s staff understand your requirement? Or are they only interested in selling you a loan?
  • Does the dealing officer show flexibility to take care of specific needs of your business? Or does the lender have a rigid template?
  • What is the reputation of the lender? Do you feel they will support you in difficult times?
  • Is the lender known for its good customer service?
  • Do you feel that they have high ethical standards? Or do you get a sense that their dealing may not be above board?
  • Do you believe they will keep safe custody of the documents you give to them – especially your original property documents etc.?
  • Do they have the capability and the intention to provide you more and more finance as you keep growing?


All these factors are critical to ensure that your financing partner is able to keep pace with you as you grow your business. Taking a short term approach of just looking at the interest rate on their loan offer may result in you running around trying to raise finance, when you would be better off concentrating on growing your sales, production and manpower. Choose a long term partner, (whether they are a bank or an NBFC does not matter these days) even if it comes at a slightly higher cost – you won’t regret the choice!

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