Flexi loans are the best option for unforeseen financing situations where a businessman requires immediate funding for his business. These are the new age loans that are designed to best serve the immediate financial requirements of a businessman. Flexi loans are a kind of pre-approved loan limit. The businessman can utilize the funds as and when required during the loan tenure.
A flexi loan can be used by a businessman for debt financing and management. He can also use the funds to finance business growth and expansion. A flexi loan can be used to finance equipment or machinery or to stock inventory. In addition, a flexi loan can also be used to pay off debts.
Significantly, a flexi loan can be secured and unsecured business loan. A secured flexi loan is availed with collateral, i.e. the businessman has to hypothecate an asset. And for an unsecured flexi loan, there is no need to hypothecate an asset. So, as per the need of the businessman, he can choose between the two.
There are various financial institutions in India that provide flexi loans at basic eligibility criteria and low-interest rates. You can look forward to availing a loan from them.
What are the Features of Flexi Loans?
also read: what are the tax benefits of business loans?
The three most important and beneficial features for businessmen are as follow:
A businessman can withdraw amount for his business as and when required, but only up to the sanctioned limit. A flexi loan is a type of overdraft facility where the businessman can withdraw the required cash for managing contingencies.
The businessman has the facility to prepay the borrowed amount as they find it convenient.
The other important benefit is that no matter what limit is sanctioned by the lender, the interest will only be charged on the amount withdrawn by the businessman. No interest will be charged on the remaining amount.
What are the Benefits of Flexi Loans?
The following are the benefits of flexi loans for a businessman:
Availability of Cash: With this type of loan, the business owner has the availability of cash every time. The business owner has a pre-approved limit. In case of emergency, he can withdraw amount as and many times within the sanctioned limit and use it.
Documentation: Since flexi loans are pre-approved, there is minimal documentation required for this type of business loans. This not only saves the time of the businessman but also makes the loan availing process hassle-free due to minimal documentation.
Withdraw: There are no limitations on the number of time the funds can be withdrawn. In case the small business owner has withdrawn some cash and he requires immediate cash again, he can withdraw funds. However, the only condition is that the loan limit must not be exceeded. Thus, there is no need to draft a new loan application every time.
Prepayment Option: The business has the ease of prepaying the loan amount. This makes the loan availing and repayment terms easy as he can avail cash and repay it as per the requirement and his desire. This allows the businessman to prepay the business loan when he has excess funds which ultimately results in paying the principal amount quickly.
Interest Charge: This type of loans for business reduces the interest cost. While there is the entire limit, the interest is only levied on the amount withdrawn. This implies, if the loan limit sanctioned is INR 5 lakhs but only INR 2 lakhs are withdrawn. The interest will only be charged on INR 2 lakhs. This also means that the EMIs will be low making it easier for the business owner to repay the loan.
What is the Eligibility Criteria for Flexi Loans?
The following is the eligibility criteria for this type of business loan:
The businessman must be between the age 25 and 60 years.
The annual turnover of the business must be INR 10 lakhs or more. This signifies that the businessman generates enough profit to repay the loan timely.
The ITR filed by the businessman for the previous 12 months must be INR 2.5 lakhs or more. This represents the profit of the business.
The bank statement of the account used for business transactions. This will help in verifying the financial behavior of the businessman.
The businessman must own either the office premise or his house. This point is compulsory to meet if the businessman is availing a collateral-free business loan.
The flexi loan limit is usually sanctioned for a time period of 12 months.
The eligibility criteria vary from one loan lender to another. Therefore, it is advisable to gather all the information regarding the eligibility criteria of the lender.
Unlike a machinery loan or working capital loan which are availed for a specific purpose, a flexi loan can be used for any business-related activity. They are flexible in nature in terms of usage and payment.
A flexi loan can also be used to consolidate all the loans. This will bring all different loans under one account. And thus, the businessman is not required to pay different loans and can easily pay off the debts conveniently.
To avail a flexi loan, you can fill the flexi loan application online. Almost every lender has an online presence these days. The businessman can log on to the website of the lender and fill the application form.