Reasons why unsecured business loans have become popular in India

A lack of adequate working capital can hinder the daily operations of your business, threatening both short-term and long-term growth. Seeking help from a traditional lender, like a bank or financial institution, comes at a cost. These institutions seek guarantee for their money and demand a valuable asset to be put up as collateral for the money they lend. If your business is already running a risk of going into loss, putting a valuable asset hostage is not going to help your cause, and that’s where an unsecured business loan comes into the picture.

Unsecured business loans are short-term small ticket loans which help you take care of routine expenditure, such as asset maintenance, vendor payments and raw material purchases. The best thing about these small business loans is that these loans are offered without any collateral. Apart from using these loans for working capital management, you can also utilise the loan funds for business expansion, however the small ticket size means these loans are best used for immediate expenses that help your business return profits.

Here are top reasons why small business owners in India are opting for unsecured business loans from NBFCs like Lendingkart over secured business loans from banks.

Helps overcome temporary business disruptions

A small business owner faces many challenges in today’s rapidly changing marketplace. Unsecured working capital loans give confidence to a business owner facing hard-times due to temporary disruptions in the market, take for example the two recent cases of demonetization and GST implementation. By the time these policy decisions were streamlined, they had already caused a lot of financial turmoil for small business owners. Unsecured small business loans played an important role in stabilizing the market by giving business owners access to funds for working capital.

Faster loan approval and quick disbursal of funds

A signature feature of unsecured business loans, offered by NBFCs like Lendingkart Finance, is that they are exclusively designed for the needs of small and medium sized businesses. Often, a small business owner needs quick access to funds to benefit from a new opportunity or to tackle immediate financial requirements. A traditional bank loan can take up to 10 days to get approved, hence defeating the purpose. In such cases, unsecured business loans come to the rescue with their faster approval times and quick disbursal of funds. Lendingkart offers quick business loans with disbursal time as low as 72 hours.

Flexible repayment options

A small business relies on invoice clearances to maintain its cash flow and profits. If a business gets most of its invoice payments after the first or second week of a month, it may struggle to keep up with the monthly payment schedule of a secured business loan which has due date early in the month. Unsecured loans from NBFCs like Lendingkart come with flexible EMI options, letting business owners choose an EMI schedule that is in sync with their business earnings.

Business friendly terms and conditions

Unsecured business loans come with business-friendly terms and provisions, such as low processing fees and pre-payment charges, auto-renewal of loan amount upon repayment, and no-hidden costs. Hence, making these loans attractive for small business owners looking for quick and convenient finance.

At Lendingkart Finance, we are constantly working towards providing small and medium business owners quick business loans to help them focus on growth and become profitable as soon as possible. To know more about Lendingkart business loans, visit our homepage or download the Lendingkart Instant Business Loans App from Google Play Store now.

Why Online Lenders are a Better Choice

Online Lenders – The Better Choice

Small businesses are increasingly moving towards online business loans and finance options for expanding their operations. Online lenders offer several benefits over financing from commercial banks, such as Flexi EMIs and quick short-ticket finance. This has made these non-banking financial institutions the choice of modern MSMEs.

For example, today, non-banking financial companies like Lendingkart Finance are disbursing working capital loans and unsecured business loans across the country whereas banks are limiting their commercial lending activities.

Here are the reasons why you should apply for a business loan from an NBFC –

Quick Turnaround Time

The one element that defines importance of finance is its timely availability. If you fail to get the requisite funds within the time frame available to you, either the opportunity will be lost or the same activity will cost you more.

Since a majority of small business owners are applying with them, banks take their own time in scrutinizing business loan applications. Thus, the process of loan approvals is slow. NBFCs, on the other hand, specifically cater to the MSME finance. Therefore, they are prompt in completing documentation, verification and disbursals.

E.g., Lendingkart Finance promises loan amount disbursal within 72 hours of documentation.

Completely Online Process

The reason why an NBFC like Lendingkart can approve loans faster is the online only loan application process of the company.

Every modern business has access to digital copies of requisite loan verification documents such as PAN, Aadhar Card, Bank Statements and ITR Certifications. An online lender can thus quickly verify the statutory status of your enterprise and disburse loans where traditional banks continue to struggle with filing and manual paperwork.

Minimal Documentation Required

In an online process, the lender can verify your business and personal information through government’s online portals, hence there is no need for excessive paperwork and documents to be submitted. For example, Lendingkart offers business loans by verifying only the essential documents for identity, address, incorporation and tax compliance of your enterprise.

Flexible Payments and More

The completely online business loan process allows lenders to cut costs associated with manual work, and they are more than happy to pass you the benefits. So, expect lower business loan interest rates, flexible EMI options and reduced processing charges when you get a business loan from an online lender like Lendingkart Finance.

If you are planning a business expansion soon or want to streamline your daily operations with a working capital loan, visit our website; www.lendingkart.com, and sign up for a quick quote.

Business Loan Index – What You Need to Know

Business Loan Index – Terms used by Lenders

The rapid growth of MSME sector in India means there is a lot of financial lending activity going on right now. While applying for these unsecured business loans and working capital loans, entrepreneurs are often left asking for explanation of certain banking terms used by the lenders.

In this post, we are covering the commonly used terms by an online lender or an offline commercial institution, when granting business loans. An understanding of these terms will not only help you make an informed decision in the future but will also help you get loan approvals faster, as you explain your business loan preferences to the lender from the very outset.

Fixed Obligations to Income Ratio (FOIR)

The cumulative total of instalments of loans already availed by you and still due in relation to your income.

Annual Reducing Interest Rates

The principal amount on which you are paying interest is reduced at the end of every year.

Monthly Reducing Interest Rates

The principal amount on which you are paying interest is reduced at the end of every month.

Daily Reducing Interest Rates

The principal amount on which you are paying interest is reduced at the end of every day.

*The EMI you pay for a daily reducing rate is less than the one you will pay under a monthly reducing rate. Similarly, annual reducing rates will have the highest EMI.

 

Amortization Schedule

A monthly installment has 2 components; the Interest component and the Principal. Amortization schedule shows the amount of interest and principal you will be repaying with each payment.

Prepayment

It means making an early repayment of the loan to reduce the tenure as well as the interest of the loan. Non-banking financial companies like Lendingkart, do not charge pre-closure fees.

EMI

An equated monthly installment is a fixed payment from the borrower to a lender on a specified date of each calendar month. EMIs are used to pay off both interest and principal (see Amortisation Schedule).

If you are looking for a quick business loan, visit us at www.lendingkart.com or download our app on your smartphone.