Small and Medium Enterprises seeking loans to fund the working capital usually face many obstacles. One of the major obstacles among the others is the inability to produce collateral to avail loan. To their savior, many NBFCs offer a loan without guarantee, i.e., business loan without collateral. A business owner having no asset to produce as collateral can avail this type of loan.
Many online sellers also face the same problem of not having collateral to offer as security against business loan. Therefore, they find it difficult to get a small business loan to maintain business growth in an upward direction. In such a scenario, a collateral free business loan turns an ideal option for them as well.
Let’s take a look at how online sellers can avail a small business loan in a hassle-free manner in just 4 steps.
Step 1: Register with NBFC
The first step of availing a business loan is the registration with the NBFC. The borrower is required to fill a simple form. Many lending institutions, such as ZipLoan, offer online registration through the website or their App. Thus, the borrower can register from anywhere with ease and is not required to visit the lending institution in person.
Step 2: Analysis of the Application
The analysis of application is a part of the credit evaluation process. The lending institute analyses the customer profile using a unique credit score, called CIBIL score. Apart from the CIBIL score, many NBFCs have their own unique internal credit score that they use to check the creditworthiness of the online business.
The loan approval is also based on the online seller’s sale and the business stability. The cash flows are also taken into consideration.
Step 3: Loan Disbursement
Once the loan gets approved, the seller can have access to the funding in a short span of time. The NBFCs understand that the funds should be available at the time of need, and therefore disburse loan in as less as just 3 days.
Step 4: Payment of Loan
The small business loan repayment term can range anywhere from 12 months to 24 months. Most NBFCs have easy repayment terms to let the online seller focus on growing their business entirely and not take any pressure regarding repayment of the loan. The seller can schedule monthly installments which would be deducted from his bank account directly.
It is needless to say that funds are one of the most important factors to run a business. An unsecured business loan is indeed a great option to generate additional funds in a hassle-free manner and focus on the growth of the business simultaneously.