A business loan can be taken from a specific traditional bank or a non-banking financial institution. However, the popularity of NBFC is much higher than that of traditional old banks. Business owners are choosing NBFC over banks to get business loans. If you are borrowing for the first time, you need to have clarity as to why NBFC have become more popular than banks to get a business loan. Here are some of the reasons why a non-banking financial institution is much better in comparison to banks for taking an instant business loan.
Benefits of getting a business loan from an NBFC
Business Loan Approval :
In comparison to banks, non-banking financial institutions offer instant approval and disbursement on business loans which makes it vital point. Where businesses are able to use the funds for emergencies and instant needs. On the other hand, a bank will take up weeks and months in order to get a business loan approval.
A non-banking financial institution is gaining a lot of popularity among various sectors in order to get a business loan. If a business is able to meet all the eligibility criteria and requirements the approval is given the same day. It actually makes sense that business owners are preferring a business loan from a non-banking financial institution.
Documentation for a business loan:
Minimal documentation is one of the most essential features that make the entire loan application process easy and smooth for business owners. While banks will need the business owner to visit the branch several times for a lengthy documentation process. The non-banking financial institutions get the entire documentation process online and instantly within a few minutes.
Documentation of business loans by an NBFC is easy and simple because the business owner just needs to scan. All the original documents and upload them on the online portal and submit them along with the online application form. There is absolutely no need to visit the branches and get the entire documentation process done. The minimal and online procedure of doing the documentation by the NBFC has made it a popular choice.
In a non-banking financial institution, the business loan approval rates are much higher in comparison to our old traditional bank. The approval rates are very high in NBFC which makes it popular for a business with low eligibility criteria. To get a business loan at the time of need or emergency. Banks operate in very traditional manners where eligibility criteria are very strict and the rate of approval is very low. If you are having a very good record and credit eligibility only then you can get a business loan from the banks.
However, for non-banking financial institutions, it is already a good option for businesses with low credit eligibility. The ones that are new in the market to get a business loan without meeting the high credit eligibility criteria. Therefore, with a non-banking financial institution the chances of getting a business loan are very high.
Credit eligibility criteria:
The non-banking financial institutions impose low credit eligibility to the business owners in order to get a business loan. Unlike traditional banks that impose very strict and high credit eligibility criteria. The NBFC sectors offer flexible credit eligibility so that maximum business owners can borrow. To develop the economy of the country by maximizing the returns. Therefore, if you are new into the market with low credit eligibility and credit background to show, you can definitely. Choose a non-banking financial institution to get a business loan.
The non-banking financial institutions offer affordable business loans in comparison to the traditional bank sectors. The rate of business loan interest that you can get from a non-banking financial institution is much more affordable in comparison to the banking sector. Since digital platforms are growing and emerging, there is a lot of competition among various platforms that help a borrower to get a competitive rate of interest making a business loan affordable and easy to get.
If you compare the rate of interest between non-banking financial institutions and banking sectors, you will always find that an affordable business loan is available with an NBFC over the traditional banks. Therefore it is always a preferred choice for the business owners to go for an affordable business loan from non-banking financial institutions and avoid the expensive business loan options that are available with the banking sectors.
Wrapping up
A business loan is indeed a versatile kind of loan that can be used for several purposes in a business starting from arranging working capital to sponsoring expansion and growth. At every stage of a business growth cycle, an instant business loan is one of the most essential aspects of getting instant funds. However, a business owner needs to focus on getting a low business loan interest rate so that the monthly installments are affordable.
