Small or even medium businesses often experience a hard time trying to avail loans from banks when they wish to expand their business, purchase a new factory or procure new raw materials or machines.
But small businesses are the backbone of a growing economy, and the present day NBFCs or non-banking financial companies do realize that. Hence they offer business loan for small businesses by structuring them differently. These loans often come at attractive or competitive interest rates and are very flexible as well. The documentation process is usually easy and the approvals are quick. Flexible repayment tenures, efficient customer service and transparent loan processing are some other benefits you can look forward to.
Types of business loans offered
Depending on your specific need, you can opt from a wide range of business loan for small businesses. For instance, bill discounting or purchase invoice are short term loans which are quickly disbursed to provide liquidity to small businesses. The tenure is usually short like 4 months, interest rates are low and collateral is not required for borrowers with high credit scores.
Both secured as well as unsecured working capital term loans are offered when you need to finance your company’s daily expenditure. The loan to value ratio might be up to 90% depending on the collateral provided. Tenures for this loan can be around 3 years.
Working capital demand loans are very flexible and designed to match the cash flow pattern of your enterprise. It usually comes with zero prepayment penalties, up to 90% LTV against collateral, provision for renewing loan tenure and low interest rates. You need to pay interest only on the utilized amount.
Secured term loans are long term solutions offered for both capital and operating expenses. Such loans are perfect if you are planning to buy a piece of land or building, new machines or a new plant. Tenures might go up to 7 years and balance transfer facility might be offered.
If you need financing for special projects, strategic buyouts or setting up of a new business unit, project and acquisition finance is your best bet. Factors like means of finance, total cost, timelines, and cash flows might be considered for this.
Doctors, nursing homes, specialty hospitals, and even pathological laboratories can benefit from medical equipment financing, when they need to purchase advanced machines like MRI Scanner, X-Ray, Color Doppler, dental chairs etc. Long tenures and attractive interest rates are guaranteed.
Before you apply
Eligibility criteria might vary from one lending institution to another. But some parameters might be similar. For instance, you must be self-employed, or be in a partnership or be a public, private business. You should also be in your present business for at least 3 years, and be able to show that your business is profitable by industry standards. A high credit score is also essential.
Regarding documentation, you might have to submit the audited financial statements and projections from last 3 years. Profiles of the partners and directors might have to be submitted too, apart from company registration documents.
Finally, go through the terms and conditions of a lender carefully and choose a loan that boosts and takes your business to great heights!
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