As a small business owner, it is very important for you to keep a close watch on the state of the business finances as it ultimately decides the success or failure of the business. By keeping an eye on the same, you would get a sense of the real position of the business. You would know whether your business is self-sufficient or it requires additional funding to keep the operations going. A business may require funds for some upcoming expansion plans or for some unexpected expenses that might have come up. Nevertheless, it is essential for you always to have access to a ready source of funds to take care of such urgent expenses.
Generally, all business owners have a cash reserve to meet urgent financial requirements; these reserves can be used in such situations. But what if you don’t have any such emergency fund reserve? And you have exhausted all the personal savings as well? In such a situation, the best option is to avail a business loan. Many financial institutions are operating in India who offer different types of business funding to help small business owners in India meet their expenses efficiently.
About Business Loan without Security
A business loan without security is also known as an unsecured business loan. It is essentially a loan product that doesn’t require any security. The money availed under the product can be used for any business-related financial requirement. Out of the various financial institutions operating in India, NBFCs (Non-Banking Financial Companies) have fast emerged as the preferred borrowing option for small business lending. The shift in preference has been majorly due to the numerous benefits and advantages one can avail from an NBFC business loan. You can also use online tools, such as online loan calculator to get an accurate estimate of the expected EMIs and loan eligibility calculator to calculate the eligibility for a loan for a business.
In order to be eligible for an unsecured business loan of up to Rs. 5 Lakhs from an NBFC, the business must have an annual turnover of at least Rs. 10 Lakhs in the previous year. The NBFCs offer flexible repayment tenure of up to 24 months to repay the business loan amount. Additionally, it also gets the option to foreclose the loan account after the payment of 6 EMIs, without incurring any foreclosure charges. The money borrowed can be used for any business-related requirement without prior informing the loan lender.
NBFCs are online lenders as well as they follow the online loan process. They follow an independent credit evaluation process; they evaluate the creditworthiness of the borrower holistically by taking various business factors into consideration, in addition to the CIBIL score and history. This process ensures that the eligibility is enhanced to get small business loans approved. Besides, NBFCs follow a paper-less process where they only require to provide soft copies (PDFs) PDFs of the basic, KYC, and business documents. If the profile/application meets the eligibility criteria of the lender, the application would be approved, and funds would be disbursed within a few working days.
NBFCs, with their transparent working style, keep you informed regarding the stage of the loan application through SMSs, e-mails, and calls. You can conveniently apply for a business loan online through the lender’s mobile App or website. It eliminates the need to make endless visits to the lender’s office to know about the status of the business loan application.
How to get a Business Loan?
Availing an unsecured business loan from an online lender or NBFC is a straightforward and effortless process. It is very convenient to follow. The following are some steps involved in availing a business loan from an online lender:
- Identify the Requirement: for this, you can also take help from professionals. However, you can do it yourself as well. But before you start the whole procedure, just remember that you have to assess the accurate estimate of the business loan amount. You must only apply for the amount which you require as it will have a direct impact on your finances as you would be bearing the interest expenses.
- Ascertain Eligibility: you can use online tools, such as online business loan eligibility calculators to determine eligibility for a business loan. Besides, you must apply for the amount which is lower than your eligibility to increase the chances of getting the loan application approved.
- Research Online: perform thorough research online as well as offline to identify the loan lenders operating in the market. Also ensure that they who offer unsecured business loans to help you meet your business requirements. Then select the loan product that can fulfil all your business needs.
- Apply Online: use the online application form of the lender to apply for the loan for business. It will require you to upload the soft copies or PDFs of the documents required by the lender.
- Processing: the online lenders would then process the business loan application as per their terms and conditions and guidelines. This includes checking the CIBIL score and history and conducting a credit evaluation check.
- Approval/Rejection: if the profile meets or doesn’t meet the requirements, the application form would be approved or rejected. If approved, the application would be processed within a few working days.
- Disbursal: a lender’s representative will come to you with a loan disbursement kit to sign the loan agreement. Afterward, the amount would be credited to your bank account.
With such a hassle-free and convenient business loan application process, it is no surprise that NBFCs and online lenders have become the preferred choice for small business owners.