There are several strategies and requirements to succeed and prosper in the business. One such requirement is access to funds to meet working capital requirements of the business. In situations where the business owner does not have enough funds, we can avail a working capital loan. This type of loan is offered by banks, NBFCs, and private lenders to help business owner meet their everyday operational expenditures.
Working capital also acts as a cash cushion to cover up unexpected expense requirements, such as off-season manufacturing of goods and seasonal hiring. Working capital loans are generally offered for 12-24 months. The rate of interest varies from one lender to another. The point worth mentioning here is that NBFCs offer working capital loans on easy terms and conditions as compared to banks and private lenders.
Let’s take a look at the eligibility criteria for a business loan:
- Age: to apply for the loan, the borrower must be within the age of 25 to 55 years (at the time of maturity of the loan). Nevertheless, this age bar may vary for different lenders.
- Business vintage: generally, the business needs to be operational for at least two years to be able to apply for a loan for business.
- Turnover: the business should meet a specific annual turnover criterion to have a positive impact on the lending institutions. A minimum business turnover of Rs. 5 lakhs is required, which may vary from lender to another.
- Income Tax Return: the ITR filed by the business owner should be more than Rs. 1.5 lakhs.
If the business owner is eligible for a working capital loan, he has to submit a few documents required by the lender. The list of general documents required by the lenders are as follows:
- Duly filed loan application form with passport size photographs.
- KYC documents, such as PAN, Aadhar, address proof, etc.
- Business vintage documents, such as incorporation certificate.
- Income tax returns for the past year.
- Bank statement for the past nine months.
In the case of unsecured business loans, NBFCs are the best option as they offer instant business loan at minimal documentation. The NBFCs also have trouble-free customer policies. They have a hassle-free online loan application form that the borrower can fill online. In addition to a working capital loan, they also offer machinery loan, capital loan, flexi loan, and term loan.
To enable business owners to carry out their business operations swiftly, working capital loans are lent. Working capital loans are not meant for buying long-term assets but sailing the business through required financial requisites. Simple terms and facile documentation requirement make NBFCs the most sought-after option for loans for business in India