Where the existing banking institutions fail to cater to the need of growing small-scale enterprises, the need for a business loan from NBFC arises. The given points explain how the prospect of business loans from NBFC in India is changing the situation of businesses for the better
1. Relaxed Lending Norms:
Over the years, several micro, small, and medium enterprises (MSMEs) have emerged in the Indian economy. These somewhat small scale businesses contribute at least a third to the Indian GDP. Such small-scale businesses require special lending norms. Applying for a loan in a bank involves investing a lot of time, a lot of paperwork and some collateral pledge. NBFCs, on the other hand, serve the purpose of lending money to small-scale businesses with relatively relaxed norms. NBFCs have become the go-to option for MSMEs as they fulfill their loan requirements readily. In some instances, companies are not even required to pledge collateral to obtain a business loan from NBFC. NBFC loan companies have made the whole process of getting funds more relaxed than ever.
2. Pre-Approved Loan Limit: Businesses enjoy a pre-approved loan limit upon taking a loan from an NBFC loan company. Companies can withdraw funds as per their requirement whenever they want. They do not have to request for multiple approvals from financing institutions every time they require funds.
Moreover, businesses only have to pay the interest for the amount that they use out of the approved loan limit. Banks, on the other hand, require companies to pay for the whole amount. Therefore, procuring a business loan from NBFC is more beneficial to businesses as they have to pay a lower monthly EMI.
3. Flexi-Business Loan Options: Flexi interest-only business loans provide the option of paying the principal amount at the end of the loan period. Companies only have to pay for the interest amount in the monthly EMIs, therefore, further decreasing the monthly EMI amount.
NBFCs are, thus, changing the prospect of business loans in India and are fulfilling the loan requirements of Indian businesses in the most comfortable manner possible.