While operating a small business, the entrepreneur often witnesses financial emergencies knocking on his door when he is least prepared for it. As a matter of fact, he can never get rid of the possibility of a financial emergency affecting his business at some point in time. But, what he can do is to prepare himself beforehand for the situation. So, whenever any such situation comes, he has all the necessary or requisite resources to handle it effectively and efficiently.
Similarly, there are certain dreams and aspirations regarding the business venture that he really wants to accomplish. But the limited financials don’t allow him that freedom. As a result, he is just busy taking care of the basic routine of the business. And he doesn’t have the time, money, and courage to take the big step towards the fulfillment of his long-standing dreams.
In the above-mentioned scenarios, your nemesis is the lack of funds. It can be due to delay in payments from vendors or some additional expenses coming up. But the matter of the fact is that lack of money has been stopping the small business from realizing its true potential. Having said that, there is no need to be disheartened and feel helpless as now one can easily apply for a business loan the at lowest interest rates, which helps taking care of the business expenses at hand.
Several financial institutions operating in the market, such as banks and NBFCs, offer this credit facility to small business owners in India to help them take care of their business-related emergencies. Nevertheless, business loans are undoubtedly the best and ideal option to meet business requirements.
What are Business Loans & how to avail them?
Business loans are the loan products which are offered by financial institutions to small business owners. Depending on the nature of the requirement of the business owner, business loans can be secured or unsecured. The amount borrowed as a business loan must be used for business-related expenses only. It has to be repaid in easy monthly installments called EMIs. There are various types of financial institutions operating in the market which offer this facility, such as private banks, public banks, NBFCs, and online lending companies. Out of all these options, online lending companies have emerged as the preferred mode of borrowing for small business owners.
Notably, Online lending companies are specialized NBFCs that offer business loan at the lowest interest rates for small business owners. These companies generally conduct their operations through online channels only, i.e., mobile app, and website. They follow a unique paper-less procedure wherein the applicant is required to upload only the soft copies of the documents to process the application.
With their efficient working, NBFCs can process the application within a few working days itself; generally within a week. The applicant can also use NBFCs’ EMI calculator to ascertain his eligibility as well as expected monthly payments to plan the loan repayment accordingly.
If the annual turnover in the previous year is more than Rs. 10 lakhs, these companies offer business loans without security between Rs. 1 lakh to Rs. 5 Lakhs, depending on the credit profile. The maximum repayment tenor that the applicant can opt for is 24 months. He can also choose to pre-pay the loan amount according to his financial situation, without incurring any additional charges after the payment of the first 6 EMIs and thereby saving you a lot of money on the interest costs.
These companies use an independent credit evaluation process to ascertain the creditworthiness of the borrower, in addition to CIBIL. This approach helps in getting a holistic view of the finances and enhances the eligibility for an unsecured business loan at most competitive interest rates.
Why must you Estimate your Business Loan Requirements Accurately?
It is essential for every applicant to estimate the business loan requirements accurately. It is a significant financial commitment for any individual, and a single error might cause a considerable amount of losses. The borrower must use online tools like business loan EMI calculator to ascertain the business loan requirements and repayments accurately.
The following are a few reasons explaining the importance of this process:
- If the business owner borrows more than what he requires, then there is a possibility that the money would remain underutilized for an extended period. However, he would still incur interest cost on it. This would be a serious drain on the limited resources.
- If he borrows less than what he requires, it is possible that the purpose for which the business loan is availed may not be fulfilled and the whole exercise would turn out to be futile.
- He needs to work out on all the requirements accurately. So, be double-sure about them and then only proceed ahead with the application for a business loan. If required, an entrepreneur can also take the help of professionals for this.
- If the business owner is unable to repay the EMIs on time, it will not only ruin his credit score but would also make him ineligible for any business loan in the future.
It is therefore vital that every business owner takes all the necessary steps to estimate the business loan requirements accurately and then only proceed ahead with the application for a business loan.