Every business owner looks forward to availing the best business loans in India. A business having a strategic business plan but not enough funds can execute the plan easily by availing a loan for the business. In addition to the traditional lenders, there are many digitally enabled lending platforms are well, called FinTech that offer best business loans in India. All these multiple lending options together tend to confuse the business owner.
That said, there are different types of loans available in the market as well that further add to this confusion. So, what kind of a loan to avail from a FinTech company? Or from a traditional lender? How to apply for a loan for SME or MSME loan? Is this process a month long or just a few days long? These are some questions you can ask to determine if the lender is right for you.
Before discussing how to find the best business loans, let us first discuss the different types of loans available in the market.
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Working Capital Loan: This type of loan is availed to finance the regular operations of the business. A working capital loan is usually availed for a short term. The funds are used to procure raw materials, pay for utilities, buy inventory, and pay advances to suppliers. This loan can be used as a cash cushion and to manage sale fluctuations.
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Term Loan: The FinTech Companies in India also offer terms loans for business – loans specified for a term and meant for investment. Term loans can be availed by professional service providers, traders, manufacturers, etc.
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Machinery Loan: As the name conveys, a machinery loan is availed to procure machinery and equipment to be used in the manufacturing process. A business in fabrication, packaging, construction, and assembling of products can avail this type of loan. The FinTech and online lending companies offer flexible repayment terms for machinery loans.
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Capital Loans: Capital loans are designed for capital investment. These loans are only meant to take the business forward. The funds can be used for business expansion and growth. Many lenders offer capital loans to small business owners at low-interest rates.
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Flexi Loan: A new age loan, a flexi loan is like a credit card. A loan limit is sanctioned by the lender for a pre-determined period of time. The business owner can withdraw funds at any time. He would be charged interest only on the amount withdrawn.
Now let us take a look at 5 points which will help you in finding the best business loans online and offline. You can follow the following points:
Note Requirements
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In case you have a good CIBIL score, you might feel like availing a loan of the amount which is higher than your requirement. You will find keeping a bigger cash reserve for working capital a good option. However, this is a wrong strategy and it can be harmful to your business. It is important to understand here that a big loan amount would also mean more interest cost will be incurred on it and the EMIs will also increase significantly.
In situations like these, you can use business loan EMI calculator and calculate the sum you will have to pay. This will help in assessing the amount that is correct for you. And then you can choose among the best business loan offers available for you.
Loan Eligibility
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Some lenders may ask you to pledge an asset as security for the loan while offering loans without security. It is important to know your eligibility that if you would be able to hypothecate an asset or not. In case you cannot hypothecate an asset, collateral-free loans will be the best business loans for you.
FinTechs are the best business loan lenders that offer business loans without collateral. They sanction loan entirely on the basis of the factors like age of the borrower, years of operations, revenue earned, etc. You can easily check the eligibility criteria of the lender by visiting his website or speaking to their customer service team.
Compare Loans
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Comparing loans will help you choose the best option available for you. You must compare loans on the basis of a number of parameters and not get allured by the lender who offers loans at the lowest interest rate. There are lenders who offer SME loans at low interest rate, high processing fee and have few hidden charges as well.
Documentation
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To verify if you are eligible or not, the lender would require proofs in terms of documents. Most of the lenders require PAN card, KYC documents, income tax returns for the previous 12 months, and bank statements. These documents are to be submitted along with the business loan application.
The benefit of availing a business loan from FinTech is that they require fewer documents and you can upload their soft copies on their website.
Apply for Loan
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Now that you know your requirement, eligibility, and have also collected the documents, you can not apply for best business loans. You can apply for a business loan online easily without visiting the lender’s office. They also offer best business loan rates and have no hidden charges.
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