Business Loan From NBFCs vs Others

Last Updated: 11 Oct 2024

As a business owner, securing the right funding is crucial for growth and success. Traditional banks have been the primary source of business loans for a long time, but in recent years, Non-Banking Financial Corporations (NBFCs) have emerged as compelling alternatives.

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Advantages of choosing a Business Loan From NBFCs vs others when seeking a business loan.

explore the advantages

Flexible Eligibility Criteria:

One of the most significant advantages of opting for an NBFC business loan is its flexible eligibility criteria. Traditional banks often have stringent requirements, demanding a high credit score, several years of business vintage, and substantial annual turnovers. NBFCs, on the other hand, follow a more relaxed approach, making it easier for businesses with lower credit scores or limited business experience to qualify for a loan.

Quick Disbursal of Funds:

Time is of the essence in the business world, and NBFCs understand this well. Unlike traditional banks, which involve a lengthy verification process and extensive paperwork, NBFCs have streamlined procedures, ensuring quick disbursal of funds. It allows business owners to access much-needed capital promptly, enabling them to seize growth opportunities without delay.

Competitive Interest Rates:

Interest rates play a crucial role in determining the cost of borrowing. NBFCs often offer business loans at more competitive interest rates compared to traditional banks. It is because they are not bound by the Reserve Bank of India’s (RBI) Prime Lending Rate (PLR), granting them greater flexibility to set rates that attract a broader customer base. Moreover, the processing fees and other charges levied by NBFCs are generally lower, easing the financial burden on borrowers.

Digital Loan Processing:

Embracing the advancements of the digital era, many NBFCs have adopted paperless loan processing. Through their fintech platforms, business owners can apply for loans online without visiting physical branches or submitting extensive paperwork. This user-friendly approach saves time and effort, allowing entrepreneurs to focus on their businesses rather than getting bogged down in administrative tasks.

Pre-Approved Loan Limits:

Several NBFCs offer business loans with pre-approved limits. This unique feature enables business owners to withdraw funds as needed, with interest charged only on the amount utilized. As a result, borrowers can keep their EMIs low, freeing up capital for other business needs. Additionally, pre-approved loan limits provide a safety net, ensuring businesses have access to funds when unexpected expenses arise.

Why Choose NBFC Business Loans Over Others?

There is a veritable difference between NBFCs & other business loans. NBFCs Over Banks for Business Loans are any day a better decision because of the customer-friendly regime. NBFCs are registered under RBI, so you do not have to worry about any fraud here.

Less Stringent Documentation Requirements:

Applying for a business loan with an NBFC involves minimal documentation, simplifying the application process. This advantage saves time and reduces the hassle for entrepreneurs, making the loan journey smoother and more convenient.

No Collateral Required:

Unlike traditional banks that often require collateral to secure a loan, most NBFCs do not demand such guarantees. It is especially beneficial for businesses without significant assets, as they can still access the necessary funds without risking their valuable possessions.

Faster Processing Times:

NBFCs are renowned for their rapid loan processing times, thanks to streamlined procedures. For businesses that urgently need financing, the swift approval and disbursal process provided by NBFCs can be a game-changer.

Higher Loan Amounts:

NBFCs may offer higher loan amounts compared to traditional banks, accommodating the financial needs of growing or expanding businesses. This higher borrowing limit can be advantageous when seeking substantial funding for business projects or expansions.

Understanding NBFC Business Loan Eligibility Criteria

While specific eligibility criteria vary among NBFCs, some common requirements include:

Age:

Applicants must be between 24 to 65 years old at the time of loan application and maturity.

Business Vintage:

The business should have been operational for a minimum of 2 years

Annual Turnover:

The minimum annual turnover requirement is usually around Rs. 6 Lakhs.

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Conclusion

When it comes to securing a business loan, NBFCs have emerged as formidable contenders to traditional banks and other lenders. With their flexible eligibility criteria, swift loan disbursal, competitive interest rates, and digital loan processing, NBFCs offer unique advantages that cater to the needs of modern businesses. Choose wisely and pick the loan that can make your business go beyond horizons!