Why Choose NBFCs Over Banks for Business Loans in India?

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.

 

Disclaimer

We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Business Loan disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply