Looking for a small business loan? Wondering if you are eligible for it or not? We will be discussing the various business loan eligibility criteria and documents required in order to get a small business loan. When you go to a bank in order to get a business loan, the paperwork and the documents they ask for is so much that you seem to wonder if you’re applying for a business loan or sitting for an exam.
The other major problem with the bank loans is how slow their entire process works. The NBFCs, on the other hand, make the entire business loan process really fast and easy. The eligibility criteria for small business loans with NBFCs are also very lenient and easy to fulfill.
NBFCs, also known as Non-Banking Financial Companies, have entered this sector with an initiative to help small-scale businesses grow with the help of their small business loan services at affordable interest rates. The best part about these NBFC small business loans is that you don’t have to necessarily put up any asset as a collateral against your business loan amount.
The entire process can be carried out online starting from the submission of application form to getting your documents verified and even your loan approved. The business loan eligibility criteria for these business loans are also very easy to fulfill.
Eligibility Criteria for Small Business Loans
- Minimum turnover in the previous 12 months – Rs 10 lakhs
- Minimum ITR in the previous year – Rs 2.5 lakhs
- Ownership of either a house or the office
- Business place and residential places must be different
- The business must be in operation for at least the last 2 years
Documents Required for Getting your Small Business Loan Approved
- Bank statement – previous 12 months
- PAN card
- Income Tax return – previous 2-3 years
- Address Proof – Business Place
- Address Proof – Residential
The above-mentioned business loan requirements and documentation are pretty less complex when compared to the bank business loans. Also, the process is very easy to follow. The reason why most SMEs are turning their hopes towards the Non-Banking Financial companies is manifold. Let’s look at some of the major advantages that small business loans from the major NBFC players have to offer:
- Instant cash: Once your business loan gets approved, the loan amount is credited to your account within a few working days. Most businesses apply for a loan when they are in a dire need of cash and it gets very problematic when the business loan amount doesn’t get disbursed quickly enough even after the loan gets approved. The NBFCs ensure that the loan amount can be of use for small businesses when they really need it.
- No collateral: One of the biggest problems faced by small and medium-scale business houses while going for a business loan, be it a big one or a small one, is the need to place an asset as a collateral. The mortgage valuation and other documentation take a lot of time and effort. NBFC business loans, however, don’t ask for any collateral asset making the business loan approval process a lot easier and faster.
- Minimum paperwork: As discussed earlier, the business loan eligibility criteria and the documents required to get a small business loan approved with NBFCs is minimum. Fulfilling these requirements are not a tough task and one can easily get all this done within a day or two. What makes this a lot easier is the fact that the entire process can be carried out online so that you don’t even have to visit your lender’s office in order to submit the papers. Just focus on your core business while NBFCs process your business loan.
- No prepayment charges: NBFCs don’t charge any penalty if you decide to pay back your business loan amount prematurely unlike the banks which will charge you a good amount for making an early payback of the loan.
It is the MSMEs who mostly opt for small business loans and the collateral requirements and the complex paperwork makes it very tough for these business houses to get a business loan and grow their businesses.
Many of these business houses don’t have an asset to put up as a collateral and that’s why it’s always better to go for NBFCs who have a very easy and smooth loan approval process. Small and medium-scale businesses need to be promoted and supported in order to fuel the overall economy of the country and that’s where these Non-Banking Financial companies are doing an exceptional job.