Medium or small enterprises often face a challenge when it comes to grow their business or expand their operations. Raising capital is the biggest and, in most scenarios, the only way to grow your business. The big question now is where to get this capital from – a bank loan will always be the most common suggestion. However, if you do a bit of research, then you can find out a number of other affordable options as well. Many small businesses are now shifting towards the prospect of going for Non-banking financial companies (NBFC), which mainly focuses on making business loan approval for small businesses an easier process.
The main reason behind this change in preference has been the ease at which you can get your business loans approved with an NBFC. Another big factor is that businesses don’t necessarily have to place any collateral in order to get the business loan. Whereas, with bank loans, you must keep a collateral against the loan. Presently, there are a number of companies which are offering non-collateral loans for small business. With more and more youths getting attracted towards entrepreneurship and start-ups, the demand for small business loans is at an all-time high.
Things to know about non-collateral loans from small businesses:
● No collateral: As the name suggests, you don’t necessarily have to put up any collateral against these business loans, which means no need to do the mortgage valuation or any other paperwork. One of the reasons why most small businesses fail to get loans is because either they are unable to put up any collateral or they don’t happen to have all the necessary documents ready.
● Easy processing: Even when you are ready with all the documents and a valuable collateral, the process of approving a bank loan is way too lengthy and slow. It is a huge demotivation for all those small businesses willing to up their operations. NBFC Non-collateral business loans ensure a fast and easy approval giving you the opportunity to focus more on your business rather than spending time doing the paperwork and documentation.
● Fewer rules and regulations: When you are looking for instant funding, the rules & regulations of getting a bank loan isn’t really helpful at all. Getting a non-collateral business loan is a good option here as it really doesn’t weigh you down with various rules and procedures.
● Best for working capital: For businesses looking for loans as unsecured small working capital in order to smoothen their cash flow, unsecured business loans are the best option. It is quick and easy to approve and also doesn’t require any collateral or mortgaging. Businesses looking for working capital loans are mostly in need of instant cash to ensure that there is no disruption in the day-to-day operations. In these cases, the faster the business loan approves, the better.
● A rate of interest: The interest rates at which non-collateral business loans are offered are not that high and best in the market. So, it also makes sense to avail an unsecured business loan from NBFC as the rate of interest are not high. Also, the NBFCs charge very minimal processing free and do not adopt stringent criteria while passing the business loan. That’s why most of the businesses are moving away from banks and are going for this alternative.
● Credibility, not that big a factor: Most banks refuse to offer loans if they see you have a poor credit rating, they just won’t take that risk. However, NBFCs are pretty generous in this case as well and are ready to offer non-collateral loans to small businesses even if they have a lower credit rating. These non-collateral business loans are the best options for borrowers with a lower credit rating.
The above-mentioned factors are the reasons that have attracted loan-seeking businesses to non-collateral business loans offering from Non-Banking Financial companies. The ease of business loan approval, quick processing, and every other factor which make the entire process really swift are the main advantages of these institutions over banks. Metaphorically, if banks act as a strict professor, NBFCs act like your cool buddy.