Small businesses acquire a significant share in the business sector of India. In the financial year 2019-20, micro, small, and medium businesses have witnessed a growth of approximately 18.49%. The growth in this sector has also contributed to the increase in demands for small business loans.
Moreover, a city which has recorded a considerable upsurge in its small and medium businesses is Hyderabad. Since the previous decade, it has become a hub for startups. To finance these entrepreneurs, several lending institutions offer business loans in Hyderabad. The advances help businesspersons to meet the daily monetary requirements of a business. It also enables them to run a business efficiently.
6 Reasons why small business loans are becoming popular in India
Small businesses cannot thrive in the absence of adequate working capital. Therefore, it is essential to calculate the approximate amount of it needed for the proper functioning of the business. While running a business, entrepreneurs need to make several payments for smooth day to day operations. To meet such financial requirements, they opt for business loans, among others. Besides meeting the daily business needs, these advances ensure both short-term and long-term business growth.
The easy accessibility of small business loans has made them popular among entrepreneurs. Moreover, the following 6 factors have contributed to its popularity.
- Quick disbursal – While operating a business, its owners often face emergency fund requirements. Certain payments have to be made on an urgent basis, as any delay can lead to a significant loss in the business. To resolve this issue, individual lending institutions facilitate quick approval and disbursal of loans. Here, applicants can apply online using primary documents. And, the credit is approved and disbursed in a small interval of time.
- High loan limit – Another factor which has made small business advances popular is its high loan limit. Lending institutions approve such loans with funding quantum as high as Rs.20 lakh. These advances are necessary to meet the daily financial necessities of business or to invest in infrastructure. Moreover, this fund also helps businesspersons to meet the overhead expenses.
- Zero collateral – Business loans for small-scale ventures are unsecured advances. Here, the borrowers do not need to pledge collateral while applying for a loan. In the absence of this, there is no need for assessment of the value of assets. This makes the process of loan disbursal quick and hassle-free.
Additionally, certain NBFCs like Bajaj Finserv provide pre-approved offers on the likes of business loans, personal loans, and credit cards. Borrowers can check these pre-approved offers by providing their name and contact details.
Moreover, they also have loans for specific cities, business loan in Hyderabad and business loan in Bangalore.
- Flexible loan– Certain lending institutions offer the facility of flexible loan. This service lowers EMI by 45%. Here, business owners can withdraw the amount as per their needs. Interest is charged only on the amount withdrawn. Moreover, a borrower availing this loan has to pay zero prepayment charges.
- Minimum documents requirement-Borrowers have to submit minimum requisite documents while applying for small business loans for their small scale business. Mostly while applying for it, borrowers have to identity proof, address proof, financial records and business ownership documents.
- Flexible tenure-Small scale business firms often face a challenge while repaying the loan on time. Flexible tenure offered by the lending institutions is beneficial for them because they can choose convenient repayment tenure.This facility allows them to divide their repayment amount into small EMIs, which is easier to pay. However, a borrower must carefully choose the tenure of repayment as failure to repay the amount on time will affect the credit score.
Small business credits are crucial for operating a business smoothly. These credits not only satisfy the financial need of the day to day business activities, but it also helps an enterprise to grow. A borrower can avail these advances to invest in infrastructure. These unsecured loans are quickly approved, thus making them a suitable choice to meet any business emergency.
Moreover, the eligibility criteria for these loans are simple, and a borrower can easily avail it by producing minimal documents. The flexible terms and conditions of this form of credit like low-processing fees, flexible tenure and such others, also contribute to its popularity among small business owners.