Business Loan Features that Make Them Suitable Enterprise Funding Options
The number of small and medium-sized businesses in India has witnessed a recent boom, especially after the government’s push towards the start-up culture. Further, many SMEs have entered their phases of growth and expansion, initiating to elevate their statuses and increase overall contribution to the economy. To do so, one of the primary needs a business encounters apart from a set vision and an accordingly charted plan is financing. These enterprises often seek funding options like business loans, which provide them suitable financing value while keeping its features flexible enough for easy loan management.
Businesses prefer to meet their funding needs through these debt financing options also because their processing and availability involve one of the least durations involved in raising money. Several financial institutions in the market today provide these loans for businesses to help fulfil the funding needs of enterprises with ease. The loan options are designed to meet the dynamic funding needs a business may come across. Below are given some top features of a business loan that make it a suitable financing option for enterprises.
Funding with Zero Collateral
For a newly growing and/or expanding business, the prospect of collateralising business assets to raise fund can in itself be a massive risk. Plus, many small-scale businesses may not altogether have any asset of suitable value that can be utilised to secure funding. Availing collateral-based loans thus often remains out of the ambit of medium to small-scale businesses.
A business loan, however, often comes with zero collateral requirement, which makes it an unsecured financing option. To avail the loan, you need to meet certain set of eligibility requirements that the lender lays down. Some common requirements that you would need to meet for availing an unsecured loan for business include the following.
– Individual and busiess credit score above 700
– Borrower’s age between 25 and 75 years
– Business vintage of not less than 3 years
– Fixed monthly and annual income as stipulated by the lender
– Residential citizenship of India
Once you have meet these requirements, you can apply for the loan with your selected lender. Even though, make sure to arrange all necessary documents prior to applying so that the lender finds it easy to verify your eligibility for the loan and asses your repayment capacity.
Affordable Financing Option
Even though available as unsecured funding options, these loans are available at affordable rates and charges levied by lenders. One of the prime reasons why you can find affordable rates on your loan is that the presence of several lenders in the market makes this loan competitive, bringing down its rate to the level of easy affordability.
Along with competitive business loan interest rate, you can also find other fees and charges applicable on these loans at nominal rates. Before finalising your loan offer, make sure to thoroughly compare your various loan options available in the market for applicable rates to find the lowest levy.
Flexible Tenure for Repayment
An essential aspect of affordability is determined by the flexibility in the choice of tenure a borrower is allowed to select. Given that these loans come in high financing values, their repayment should ideally involve extended tenures that keep the EMIs payable affordable. Thankfully, it is easy to secure a repayment tenure of up to 5 years for a business loan offer from reputed lenders in the market.
When choosing your tenure that keeps repayments affordable as per your business’s financial standing, it is best to assess the impact with the help of dedicated tools like an EMI calculator. Using the tool is easy, which only requires the entry of loan amount, tenure, and interest rate applicable to compute the EMI values payable. Accordingly, you can make changes to the loan amount or tenure value to arrive at a suitable EMI value and apply for your loan.
For eligible businesses that hold suitable credit history and have stable as well as decent income, availing a business loan of up to Rs.25 Lakh should not be a trouble. Before you apply for your loan, make sure to draft a clear business plan for the future and keep your financials updated. A well-thought-out business profile allows lenders to approve the loan without much hassle.
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