There are times when you have an urgent expenditure that can’t wait, especially when you own small business. Whether you need to buy machinery or pay your staff, funds are required at every step. During such times, you need an instant flow of cash to fulfil your emergency needs.
With the rise of alternative lenders, it is now easy to get business loans within a few days. All you need to do is to fill out an application form and fulfil the eligibility criteria. Once that is done, and if your loan is approved, you get money in your bank account quickly. You can choose the repayment period based on your comfort – anytime between 12 to 24 months.
The best bet for small businesses is to approach alternative lenders for several types of business loans, ranging from machinery loans to working capital loans. However, the presence of several loans in the market might confuse the business owners. Before you decide to go for a specific type of loan, you need first to assess your needs and then make an educated decision.
Here are the types of quick business loans you can get for your small business:
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Machinery Loan
A machinery loan is useful for a business in several ways. When you run a business, there are several needs you must fulfil. It is essential to fulfil your daily manufacturing targets to meet the demand of your products. For that reason, you must keep all your machinery and equipment up to date. There are times when you might face a financial crunch and won’t have the funds to upgrade new machinery, that’s when a machinery loan comes to your rescue.
A machinery loan proves helpful when you need to buy or upgrade machinery to meet the production demands. A machinery loan can be availed from banks, NBFCs, and other lending institutions. This is how easy it is for a small manufacturer to avail a machinery loan in these circumstances.
Working Capital Loan
A working capital loan is one of the best ways to avail short-term financing. In a nutshell, the difference between current assets and liabilities is what is known as working capital. This loan is essential to finance a small business’s everyday operations. It is not used to purchase long-term assets or investments but instead used to meet the company’s short term operational needs. This type of quick loan is especially useful for those who experience frequent ups and downs in their revenue.
Term Loans
In case your business needs to purchase equipment, renovate the office space, or has a similar investment to make, then a term loan is the best option. These loans are offered by banks, credit unions as well as online lenders. Going for online lenders is a great solution and proves to be beneficial in the long run, especially since they offer speed and convenience, and also have flexible eligibility conditions. You can also choose to repay the amount as per your comfort – between 12-24 months.
Collateral-free Loans
Collateral-free or unsecured business loans are particularly useful for small businesses as they do not require the owner to surrender a business or personal asset as collateral against the procurement of the credit. Small businesses can typically apply for these loans for financial assistance and fulfil their needs. Unsecured business loans can be availed for a variety of purposes, including covering everyday operational costs and cash flows, purchase of machinery and inventory, and assistance in business expansion.
Capital Loans
Even after you have established your business, you might have expansion plans. Funds are needed to grow, and after spending your cash reserves on building your company, you may have very little left. Under such circumstances, you can opt for a capital loan to meet your financial requirements and expand your business. This type of loan is typically availed for long-term, and its loan repayment tenure may vary from lender to lender.
When applying for an NBFC business loan, the lender will ask you to fill the loan application form and provide the required documents. The following are the documents required by him:
- PAN & Aadhar number
- Personal & background financial statements
- PNL statement
- Business certificate and license
- Previous loan application history
- Income tax returns
- Bank statement
What is the Eligibility for Business Loans?
Every lender wants to ensure that he is lending his money to the borrower who would be able to repay the loan amount with interest on time. Therefore, they have several eligibility criteria through which they verify the eligibility of the borrower.
Here are the eligibility criteria:
- ITR of more than Rs. 1.5 lakhs in the previous year
- Either house or business place should be owned by the business owner
- Business turnover in the previous year should be more than Rs. 10 lakhs
- House and business office should be separate
Is it easy to get a Quick Loan from an Alternative Lender?
Thanks to alternative lenders, the process of getting a loan is simple, convenient, and hassle-free. Here are a few steps you must follow:
- Identify the need: The first step is to assess your needs and then decide on an amount. This is extremely important because your loan amount will have a direct impact on your finances, which means you would be paying additional interest in case the amount is more than you need.
- Check the eligibility: You can check the eligibility on the website of the alternative lender. Make sure you apply for an amount that is lower than your eligibility to increase the chances of getting the loan approved.
- Fill out the application form: Fill out the online application form to apply for a business loan. It will require you to upload the soft copies or PDFs of the documents required by the lender.
- Processing the application: Once you send the application form and all your documents, your lender would then verify your details as per their terms and conditions. This is when they can either approve/reject the application.
- Disbursal of the loan: Once your application has been approved, you will receive funds within a few days.
