With easier availability of business loans, a business owner can meet financial needs without much hassle. However, high interest rates may strain the finances in the long run. Hence, it’s is a good option to avail a top-up business loan if the business owner is already running on a business loan. Also, top-up loans are easy to apply and are offered at a lower rate of interest.
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What is Top-up Business Loan?
A business owner can avail a top-up loan if he is already running on a business loan. Notably, it can be availed from the same lender from whom the previous loan is availed. The criteria for this type of business loan is simple:
- Timely payment of business loan EMIs without any bouncing.
- A business owner can apply for a top-up loan after the successful payment of 6 EMIs or 9 EMIs depending on the loan tenure.
What are the Benefits of Top-up Loan?
When the financial needs arise while repaying a business loan, a top-up loan is a convenient source of finances. It also comes with a lower interest rate and lower processing fee compared to the current business loan rate of interest and processing fee. The following are the benefits of a top-up business loan:
- When a business owner applies for a top-up loan, the documentation process is minimal since the lender already has required KYC documents. He would only require updated financial documents. So, the loan is also disbursed faster. Additionally, some lenders offer top-up loan online, which is approved and disbursed within a couple of days.
- When a top-up loan is availed, there is no need to disclose the purpose of the loan. However, it is mandatory that the loan amount should be used only for business purpose.
- The loan amount can be used for various purposes, such as marketing, inventory purchase, working capital, etc. While availing a new business loan may mean high interest rates, a top-up loan would be easy on the pocket with lower interest rates.
What are the Benefits of Top-up Loan?
Since the top-up business loan is an add-on loan, there is no need to submit any additional collateral. If the business owner has previously availed an unsecured business loan, no security is required even then.
Now that you know how convenient it is to avail a top-up business loan, you can take an informed decision for your business when you face a financial crunch.
