Starting a new business is always exciting. But, did you decide on your funding sources yet? Be aware that many startups struggle to survive and about 40% fail because they run out of cash. Without enough funding, businesses simply cannot invest in elements that are important for growth like technology, equipment, and product development. Therefore, entrepreneurs must plan ahead and try to secure the necessary funds.
Traditionally, new business owners used to rely on personal savings, help from friends or family, or bank loans for funding. While these still remain viable options, there are now several other better funding methods available. These commonly include securing a business or personal loan from NBFCs. These NBFCs offer flexibility in terms of minimal documentation and easy repayment schedules. Also, they charge competitive interest rates which lower your borrowing cost.
In this article, let’s see how you can get secure business loans at low costs and remain competitive in today’s market.
Choose a popular NBFC with a good presence
Ideally, startups should consider partnering with a good NBFC with an extensive presence and reliable services. It offers secure business loans up to Rs. 80 lakhs at interest rates starting from a mere 9.75% p.a. Also, you enjoy flexible repayment tenures from 12 to 96 months. Entrepreneurs can choose a timeline that best fits their business cash flow.
Moreover, all the business loans applied are generally deposited in the borrower’s account within 48 hours of approval. Also, there are no hidden charges as all fees are clearly listed.
Go collateral-free and save time by applying online
Most NBFCs offer secure business loans that do not require any collateral. Even there is no need for any guarantor. This makes the process less stressful. Additionally, you can initiate the entire business loan application process online. This 100% digitalisation saves your time as it is simple and can be done from anywhere.
Furthermore, loans taken can be used for a variety of business needs, such as:
- Enhancing working capital
- Making purchases on Easy EMIs from offline/online store
- Expanding operations
- Buying machinery, and more.
This flexibility allows startup owners to focus more on growing their business.
Apply for business loans with less strict requirements
To obtain a business loan easily without denials, startups should apply for business loans offered by NBFCs that carry less strict requirements. This especially helps entrepreneurs who are just starting and do not have strong financial profiles.
Business loans are offered with flexible requirements. Startup owners can secure funding at a CIBIL score of as low as 685. Also, there is no need for collateral or extensive documentation. While applying for a loan, you are only required to submit the following basic documents:
- KYC documents (Aadhar, Passport, Voter ID, etc.)
- PAN card
- Proof of business ownership
- Some other financial documents
Due to these less stringent requirements, the entire process is completed quickly with funds being disbursed within 48 hours of approval. This gives startups fast access to funds.
Pick a loan variant as per your business model
Selecting the right loan variant based on your business model is important. Be aware that different types of loans are designed for various business purposes. By choosing the right one, startups can significantly improve their financial health. For example,
- Say your business is expanding rapidly.
- Now, a term loan could provide the necessary capital to hire additional staff or make necessary purchases from any of the online/ offline store.
Alternatively, if you need short-term financing to manage day-to-day expenses, you can opt for a loan limit. NBFCs offers various loan options, such as:
- Flexi hybrid loan
- Flexi term loan
- Term loan
The Flexi hybrid loan provides borrowers with a pre-approved loan limit. This allows them to withdraw and repay funds multiple times. During the initial period, you only pay interest on the amount you utilise. On the other hand, the Flexi term loan also offers flexible borrowing within a set limit, but your monthly payments include both principal and interest right from the start.
The third option of a term loan allows you to borrow a fixed sum for a specific period. In this variant, you pay regular EMIs that include both principal and interest. Ideally, startups should choose the right loan variant as per their financial needs and cash flow requirements.
Identifying reliable funding sources is important for startups, as many fail due to cash flow issues. While traditional funding sources like personal savings or bank loans still exist, several new options have also emerged. In India, these better funding options are provided by leading NBFCs. Due to the 100% digitisation of the loan application process and less strict requirements, startups can expect quick approvals with funds credited to their accounts within 48 hours.
*Terms and conditions apply.
