In recent years, the Indian economy has witnessed a massive expansion. The Small and Medium-Sized Enterprises (SMEs) have emerged as the pillars of this growing Indian economy. Not only do they contribute to the overall GDP of the nation but also generate employment opportunities for people across the country.
Most SMEs constantly look forward to upgrading their services and bring in new technology and innovations. However, this business expansion requires a large amount of capital. Earlier, owing to the limited number of financing options, availing a business loan was a tedious task for SMEs. But nowadays, as a result of the increase in online lenders, banking has become far more convenient for SMEs across the nation.
Since the Government of India is encouraging digital payments for SMEs, banks and other NBFCs are also expanding their portfolio in digital lending to SMEs. Nowadays, with most commercial banks, it is possible for registered SMEs to avail an online business loan within 24 hours. The online loan system has simplified the lending process of business loan for SMEs.
Since a large number of financial institutions are adopting to digitization and automation, availing an online loan for SME has become a quick and hassle-free process. In most of the banks and other financial institutions, lending decisions are taken by algorithms. Blockchains and robotics some of the latest additions in the banking sector. These advanced technologies are taking online lending to the next level.
One of the biggest advantages of online lending is the ‘line of credit’. Nowadays, business owners can avail easy access to funding with the help ofa business line of credit. A business line of credit is a form of anunsecured business loan and the loan amount can be used in business purposes. The funds availed can be used for short-term working capital needs.
There are certain things that business owners must keep in mind while availing an online business loan. Some of them are mentioned below:
Credit score- Most loan-providers check the borrower’s credit report before approving the loan. Apart from increasing the chances of loan approval, a good credit score can help borrowers avail a business loan at the most competitive interest rate.
Collaterals- Most business loans are secured loans, i.e. the borrower has to pledge collaterals to avail the loan. Therefore, before applying for a business loan, it is essential for the borrowers to be prepared with the documents and paperwork of their collateral. It is also essential to read the terms and conditions of the loan agreement carefully before signing it.
Minimal paperwork and quick disbursal of the loan amount are some of the major benefits of availing a business loan with prominent NBFCs. Lastly, borrowers can also customize their business loan according to their needs and requirements.