There are many loan lenders in India that offer self-employed business loans. These loans are a way to boost finances when facing a financial crunch. Although there are many business loan options available for businessmen, there are only several options of business loans for self-employed. However, the need for funds for them is always there. But in the initial period, the self-employed individual may invest his own savings. However, as the business starts functioning well, the need for more funds arises.
There can be a working capital crisis due to the delay in payments by clients. The fund requirement can be for investment for expansion as well. There can be a need for funds even when the business reaches the stage where it is generating good profits. So there would be always a need for money to fuel the business.
Getting self-employed business loans for traditional lenders such as banks may seem very challenging and the chances of getting them approved are also very thin. So, such situations make a self-employed individual feel that there is no hope left for him. However, to provide them with some relief, there are some ways by which they can get money to run their business.
Let’s take a look at such options available for self-employed individuals in India:
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Under the Start-Up India scheme, the Indian government is offering financing to start-ups in India. In addition, you can also get financial aids from various other government schemes, such as Pradhan Mantri Micro Units Development and Refinance Agency Limited (MUDRA). It is also popular as Mudra Loan Scheme. All these schemes help the SMEs in India grow and you too can take their help.
Having said that, these loans are for start-ups in India. And if you are not new in the market, there are several other options for you that you will learn about in the next points.
If you are running on a loan, you can take an overdraft facility on it, i.e. avail a top-up loan. Significantly, an overdraft facility can only be availed from the current lender from whom you have availed a loan. And only if you have a good repayment history with the lender. An overdraft or top up loan can be used for any purpose by the borrower.
In addition, a top-up loan is approved sooner by any other type of loan as the documents are already submitted when the first loan was availed.
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Angel investors are the individuals who have surplus money and want to invest it somewhere for good returns. If they feel that the business idea has the potential to make good profits in near future, they invest their money in it. There are several websites available on the internet that helps in finding the best angel investor.
Notably, the amount loaned by them to you is not to be returned in monthly EMIs as in the case of other loans. In return for their money, angel investors will have some shares in the business. And as the business will grow and start earning good profits, the investors will have shares in the profit.
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Crowdfunding is another way of getting funds for business. Crowdfunding is like angel investors. However, unlike in the case of angel investors where just an individual invests, a group of people invests in crowdfunding. All these people are not super rich but just want to invest their savings to earn returns. There are numerous websites from where you can avail crowdfunding.
The benefit of crowdfunding is that along with gathering funds, you also create and gather a market for the business. When gathering money, you also explain your business idea to them. Against the funds that you get, you will have to give some equity as well as some percentage of profits.
NBFC Business Loan
For individuals who cannot meet the eligibility of the banks, there are NBFC business loans. The self-employed business loans by NBFCs are offered at basic eligibility criteria and minimal documentation requirement. The NBFCs are the financial institutes that offer loans at customer-friendly terms and conditions – their terms are lenient than that of the traditional lenders.
In addition, they offer an online loan facility. You apply for a loan online and also submit the documents (PDFs). You can also acquire all the information related to the self-employed business loans offered by them and compare it with that offered by other lenders. This will save your time and effort that you can spend on your business.
Now that you know various options of self-employed business loans, you can make a smart choice!