Business thrives on a steady flow of funds to function or expand their boundaries. It helps entrepreneurs to fulfill and achieve their intended targets. So, it is highly vital that sufficient funds are available at all times or there are channels for procuring those funds and that’s where the question of choosing between a bank or an NBFC comes to play. Even though banks are a safer option for acquiring a loan, the advantages of NBFC Loan offset that of a bank.
Quick processing of loan:
Loans taken from an NBFC are processed quite faster as compared to traditional banks. It may take a week or more to get approval from the bank whereas the NBFC does it in a matter of few hours or days which is highly convenient for business owners.
Stringent eligibility checkpoint:
Traditionally banks impose a very tough eligibility requirement like good credit score, no bad history of repayments and a significant credit standing and as a collateral payment one may need to pledge their property for the grant of a loan, even then one may only get 70%-80% of the loan. But, in the case of NBFC, one can even get a higher amount and there is no need of collateral either.
Customized loan offers:
One of the huge advantages of NBFC’s is that they offer customized loans based on the customer’s requirement. This is very useful for small business owners as they avail the loan according to their needs. On the other hand so is not the case of banks as they impose strict procedures about the credibility of the customer. One should also be very careful with NBFC’s offers as they tend to charge a very high-interest rate to offset the customer’s credit risk status.
The bottom line:
In the end, one can say that availing a loan from NBFC is much better. However, this decision should lie with the borrower who should pick the best option for them by analyzing their requirement and credit situation. As usual be it a bank or NBFC, the onus of repayment lies with the borrower.