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Business loans are a very common means for micro, small and medium-sized businesses to bring in capital and expand, or even stay afloat in certain circumstances. In recent times, business loans have become more accessible. Alongside the traditional banks, there are many NBFCs that also offer business loans in India. NBFCs, i.e., Non-Banking Financial Companies, have started playing a very crucial role in the lending market. Unlike traditional banks, NBFCs offer new-age lending solutions that are focused on understanding the needs of the customer, analysing their business and addressing approval and disbursal in the shortest time possible. 

Here are a few reasons why you must prefer an MSME loan from NBFCs over banks:

  1. Quick and simple loan procedure

Compared to most traditional banks, NBFCs have lesser criteria when it comes to providing business loans. Moreover, their approval rate is higher, and their disbursement period is a lot lesser than traditional banks. Unlike in conventional banks, you can avail of an instant business loan from NBFCs as well.

  1. No collateral loans 

Another significant benefit is that NBFCs offer unsecured business loans, i.e., the business owner has to place no collateral with them to secure a loan. This is one of the main benefits of applying for a business loan with NBFCs instead of traditional banks.

  1. Interest rates

Most NBFCs offer competitive interest rates for micro, small and medium business enterprises. They more or less match the interest rates that are provided by traditional banks or have a lower rate than them in specific scenarios as well. This is definitely a win-win for the business owner who is seeking a loan. 

  1. Credit evaluation process

Banks heavily rely on the CIBIL score and other credit score metrics that can make or break a business owner’s application. NBFCs, however, have their own credit evaluation system that has a holistic approach to evaluating their applicant. Various factors that are considered by Non-Banking Financial Companies include bank statements of the applicant, business turnover, years into the same business, ITR of the last 2 or 3 years, etc. 

  1. Eligibility for a business loan 

The eligibility criterion of NBFCs is very straightforward. They can also help you avail of business loans that fall under a government scheme.

In Conclusion :

NBFCs are easily accessible and have simpler terms and conditions for business loan applicants as compared to traditional banks. Lower interest rates, no-collateral requirements and a simplified credit evaluation process make it a business owner’s preference over the age-old conventional bank loan.

If you want to find out everything about MSME loans and how to apply for one with an NBFC in India, head straight to Finserv MARKETS. You can do it all on this portal, from selecting NBFCs to comparing interest rates and calculating EMIs on your business loan.

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