How To Get Business Loans In India

By Author: finway
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Business loans are more pronounced than personal loans in terms of the magnitude of finance. The credit requirement in business loans is higher, hence, the approval procedures are cumbersome as well as time-taking. Though the accessibility to a business loan has become easier in India, getting approval still remains a tough task.

Challenges with traditional business loans
Several challenges arise while availing of business loans in India. Here’s a detailed look at the various challenges encountered.

Lack of Uniform Eligibility Criteria
In India, business loan eligibility criteria vary with respect to various factors such as the business type, working capital, and annual turnover. The business loan eligibility criteria also differ from bank to bank. This possesses difficulties as business owners waste a lot of time trying to meet the eligibility criteria.

Collateral Requirements
Though unsecured business loans are offered by lenders, a business loan of a higher amount still demands collateral or security deposit. In ...
... case you fail to repay the loan in the stipulated time period, the lender has the right to sell the mortgaged property.

If you are able to prove your loan repayment capability and credit eligibility, you can escape the requirement of collateral.

Time-taking Procedure
Approval of a business loan in India can take months. The time taken to approve a business loan in Delhi can severely affect the profit and loss of the business. The market dynamics are ever-evolving. At such times, lengthy sanction periods possess critical challenges for entrepreneurs.

The Need for Unsecured Loans
The unsecured business loans aim to meet the requirements of small and medium-scale businesses and are offered at various stages by various banks and fin-tech companies. It ensures a continuous flow of adequate working capital.

No Collateral Requirement
One of the biggest advantages If you do not have any collateral or security to offer, then seeking small business loans is the solution. An unsecured loan solely depends on the creditworthiness of the borrower. The loan approval also requires a clean financial history and cash flow forecast.

Flexibility in loan Borrowing and Repayment
In India, few loans have Flexi loan facilities. With this, you can borrow whenever you want and repay when you can. There is no cap on the borrowing amount as well. You can borrow as much as you want. With flexible loan repayment options, budding entrepreneurs can expand and grow their businesses smoothly.

Easy and Fast Accessibility
Traditional business loans require a detailed business proposal. This drawback is encountered with the flexibility provided in the case of unsecured loans. Moreover, the borrower is not required to produce any list of assets to procure the loan. Hence, the processing and disbursement of unsecured loans take place in a comparatively short period of time.

Eligibility Criteria for Business Loans

To avail of business loans in Delhi and other parts of India, a business owner is required to meet the business loan eligibility criteria as mentioned below.

● The applicant must be a citizen of India.
● The applicant must be above the age of 21 years and below the age of 65 years
● The applicant should be engaged in a stable job. In the case of business persons, the business must be operational for at least 3 years. In addition to this, the business should be making a profit in the last two consecutive years.
● The CIBIL score of the applicant must be high.