In the present times, Non-Banking Financial Company (NBFCs) have emerged as game-changers. These financial institutions have been helping entrepreneurs fulfil their monetary requirements and expand their businesses. NBFCs have numerous advantages over banks. Read along to get a comparison of NBFC vs Bank.
What are the Advantages of Choosing a Business Loan from NBFCs?
Let’s look at the advantages of choosing an NBFC over a traditional bank for availing of a Business Loan:
1. Flexible Eligibility Criteria
Banks usually have stringent lending criteria for providing Business Loan. They follow a strict
verification process and their documentation process is very
time-consuming, delaying the approval of applications.
For
example, while sanctioning loans banks usually ask for a CIBIL score
of 750 or above, a minimum annual turnover of Rs. 1 Crore, etc. In
comparison, NBFCs follow a relaxed approach to ensure easy financing
for their customers. You can easily qualify to avail a Business Loan
with an NBFC even with a lower credit score and limited business experience.
2. Quick Disbursal of Funds
As
mentioned above, NBFCs follow less stringent lending terms. They
have a relaxed eligibility criterion and minimum documentation.
Also, they offer facilities like pre-approved loans, to existing
customers. These factors ensure that a Business Loan is disbursed
quickly, and you receive instant funding of the required amount.
3. Competitive Interest Rates
Most
loan seekers worry about interest rates levied on their loans.
Higher interest rates result in higher EMIs and thereby, a larger
financial burden. Compared to banks, NBFCs offer Business Loans at
lower interest rates since they are stipulated as per the Prime
Lending Rate (PLR), which is not regulated by the Reserve Bank of
India (RBI). It means that there is reduced pressure on business
owners when they avail of a loan from an NBFC. In addition to this,
loan processing fees and other charges levied by NBFCs are also a bit
lower as compared to traditional banks.
4. Loan Disbursal Through a Digital Process
Fintech companies in today's digital era offer 100% paperless Business Loans, merging finance and technology. Business owners can apply online through the financier's website or smartphone apps, uploading soft copies of needed documents. The money is then transferred to their bank account within 24 hours. In contrast, traditional banks often insist on hard copies and physical presence at the branch, consuming the borrower's time and effort that could be invested in their business.
5. A Pre-approved Loan Limit
In India, many NBFCs offer Business Loans with pre-approved limits. Business owners can withdraw funds when needed, and interest is only charged on the utilised amount, not the entire loan limit. This setup helps keep EMIs low, leading to extra savings. Additionally, a pre-approved limit ensures businesses always have funds without having to submit new loan applications during times of need.
ALSO READ :- Check Your CIBIL Score for Business Loan…!
Why NBFC Business Loans?
Below mentioned are some of the key reasons why taking NBFC Business Loans is the best idea:
- Less Stringent Documentation Requirements
NBFCs require less documentation than traditional banks, which can make the loan application process quicker and easier for businesses.
- Flexible Eligibility Criteria
NBFCs generally have more flexible eligibility criteria for Business Loan compared to traditional banks.
- No Collateral
Most NBFCs do not require any collateral to process the loan. For Business Loan, you don’t have to provide any collateral security to avail loan.
- Faster Processing
NBFCs are generally known for their quick loan processing times. It can be beneficial especially for businesses that require immediate funding.
- Higher Loan Amounts
NBFCs may be willing to offer higher loan amounts than traditional banks, which can be especially helpful for businesses that need a significant amount of funding to grow or expand.
How to Apply for a NBFC Business Loan Online?
Here are the steps you need to follow to apply for a Business Loan online:
- Step 1: Press the ‘Apply Now’ button and move to the loan application form.
- Step 2: Fill in details like your PAN card number, date of birth, and residential and employment details.
- Step 3: Finally, upload the necessary documents and click on the ‘Submit’ option.
After completing the application process, the bank will notify you regarding the loan in a few hours.
To Conclude
After having a thorough idea of NBFC vs bank, remember to choose a reputable financial institution when applying for a loan. Poonawalla Fincorp, a reputed financial institution, offers a Business Loan at competitive interest rates for micro, small, and medium-sized enterprises (MSMEs) in India. Browse through our products and choose the one that's best suited to your requirements.
Frequently Asked Questions About Business Loan From NBFC
1. Why would you prefer NBFC over banks?
NBFCs offer end-to-end solutions with an easy application process
and fast approvals making your loan process faster than banks.
2. Is it better to take a loan from a bank or
NBFC?
It is preferable to take a Business Loan from
NBFCs as they have simple eligibility criteria and more streamlined
loan application processes.
3. What are the advantages of NBFCs?
NBFCs offer several advantages to borrowers, particularly those
who may not have access to banking services or those who need quick
and flexible lending options.
4. Why is NBFC different from banks?
Though banks and NBFCs have some similarities in terms of the
financial services they provide, there are several key differences,
particularly in terms of their regulatory framework, deposit-taking
capabilities, and priority sector lending requirements.
5. Do I need a high credit score to avail a
Business Loan from Poonawalla Fincorp?
You
must have a credit score of 750 and above to avail a Business Loan
from Poonawalla Fincorp.
6. What is the loan tenure for Poonawalla Fincorp
Business Loan?
You can opt for a Poonawalla Fincorp
Business Loan for a tenure of up to 36 months.