A business requires fund infusion at different stages of growth. This is especially true for a small business that is yet to get a strong footing and generate significant revenues. Such small business avail help from external sources by way of small business loan to fund business operations. Sometimes it’s about relocation and the need to install better infrastructure, such as modern equipment, and also flooring such as hardwood or Parquet Flooring, or maybe to invest in better transportation Such loans, besides the benefit of right timing also have several other advantages as follows:
- Cash flow balance
Cash situation as a measure of liquidity to carry out business operations and as a measure of solvency to service a business loan is the most critical aspect of a business. A business loan from a fintech player has certain advantages over that from a bank. Firstly, NBFCs offer short term unsecured business loan with minimum paperwork and speedy disbursement. This helps tide over any cash shortfall in the short run. Further, the interest rates are attractive which helps in saving on financing costs. Further, there is no collateral requirement, so the limited asset base of the small business is protected. Also, unlike venture capitalists and angel investors, one need not dilute the equity component of the business or part with the valuable profits. The profits can be reinvested back into the business to grow the venture further.
- Quick loan approvals
In small business units, time is of utmost essence, when it comes to financing. Fintech companies with their flexible lending norms are best suited for expansion of small business units. Digital lending channels are capitalizing on the entrepreneurship trend and providing instant small business loans to small business units.The loan process is simplified and involves the following steps:
- Online, paperless application or through an impanelled agent
- Due diligence on the application and decision
- Disbursement of a loan amount
The loan approval process, post submission of documents can be completed within a week. The hassle-free, and customer-friendly documentation process is followed up with promptloan disbursal to borrowers. For loan amounts less than Rs 10 lakhs, the sanction is almost instant on uploading the relevant documents.
- Tailor-madesmall business loans
Each business has unique business needs. Hence a one size fits all approach would be counterproductive. Fintech lenders extend customized business loans to suit the specific needs of a small business. There is considerable flexibility as regards the repayment structuring with loan amounts ranging from a minimum of Rs 1 lakh to as high as Rs 1 crore with varying tenures from 6 months to 36 months. Further, the business loans are extended even to those entities that have faced loan rejection from banks.
4- Competitive interest rates
Fintech lenders offer competitive rates compared to unorganized lenders and banks. This is because of savings on processes which are completely tech-driven. This saves considerable time and eliminates the hassles of paperwork. The interest rates vary between products and range from 18-24% on reducing the rate of interest.
5- Collateral free finance
Business loans offer money help to numerous SMEs, like B2B service suppliers, makers, traders, or distributors. Fintech firms extend collateral free unsecured, short term business loans. thus there’s no lien on any of the business assets that square measure fully protected even within the event of a loan default. this is often a giant relief to the tiny business owner World Health Organization is step by step building the quality base of his fledgling business. Further, the loan quantity isn’t restricted by the worth of the quality encumbered as is that the case in banks. The business is severally evaluated on its money strength i.e. money flows and due , permitting little business units with low operational vintage to grow.
Hence it is advantageous to avail a small business loan from a fintech lender. The business loan is extended to borrowers with a vintage of at least 3 years. Further, the business loans can be applied to diverse business purposes ranging from balance transfer, loan consolidation, working capital loan, office, commercial unit or branch expansion and any other business expansion plans. The lenders would not interfere or seek explanation on the utilization of the loan amount so long as it falls in the ambit of business activities.