Building and growing an Indian startup isn’t easy. Building a startup commonly entails difficulties, such as financial issues, especially when the business is growing. This is where an online business loan comes in handy for them. These loans provide money quickly with easy application processes, which could serve those looking forward to expanding their startups.
If you are new to this concept, let’s see how online business loans help you take your business idea from scratch to a hit!
What is an Online Small Business Loan?
Online business loans are financial products offered by banks and non-banking financial firms (NBFCs). They are different because they can be accessed online without going to any bank’s branch. Thus, they are much quicker than traditional methods for people who need money for their firms to purchase equipment or hire staff.
Importance of Such Loans
Many entrepreneurs face difficulties securing funds for capitalizing their projects due to poor access mechanisms. These include collateral demands affecting their loan-procuring ability. However, online business loans have taken away most borrowers’ fears since they have flexible policies.
What are the Benefits of Online Business Loans?
The following are reasons why one should consider using online business loans to scale up innovation:
#1. Speedier access to funds
- Conventional credit may take longer, but this is not the case with Internet business lending services.
- Some financiers approve their customers’ requests within 24-48 hours.
- This comes in handy during emergencies when you need urgent cash flows.
#2. Flexibility in loan amounts
- Depending on your needs, the loan amount ranges between ₹50,000 and ₹50 lakh.
- This means that you do not have to borrow more than you can afford to repay.
#3. No need for collateral
- Most online business loans do not require collateral like land or gold.
- Beginner entrepreneurs end up heaving a sigh of relief since it means less agony if they fail to repay these loans.
#4. Competitive interest rates
- In India, the interest rates for business loans vary from 10% to 18%, depending on the lender and your credit score.
- A good credit score (700 or above) can help you get better rates and also improve cash flow.
Why Startups Require Capital for Expansion
- Growth is not only about increasing income but also establishing sustainable businesses. This is why capital is necessary for this to happen.
- Hiring outstanding employees who possess certain skills may be a crucial expansion exercise.
- Expanding operations means renting bigger premises or opening new branches. This requires funds for such investments.
- Marketing and branding play a huge role in attracting more customers on board. This could be achieved through digital marketing campaigns supported by brand development activities.
Loans for Female Entrepreneurs
Many financial institutions in India now offer loans designed for women-owned businesses. Some of them are female entrepreneur loans with relatively lower interest rates and simpler application requirements than regular ones.
This has been done as one way to encourage women entrepreneurs from time immemorial through the Stand-Up India Scheme and other schemes set up by the government.
Did you know?
Loans for female entrepreneurs enable female founders or CEOs to make bold business moves. These include scaling their firms by increasing their stock levels or opening new branches in hotspots like Delhi, Chennai and Mumbai.
How to Apply for an Online Business Loan?
The application for an online business loan is relatively easy. Here are the steps you need to follow:
#1. Check eligibility information
- Most financial institutions demand a minimum turnover of INR 10 LPA from their clients before lending them funds.
- In addition, keep your credit score over 650 for better chances of success in applying for the loan.
#2. Gather necessary documents
- You will need a PAN and Aadhaar for KYC.
- You must show proof of business existence (GST registration number/trade license number).
- The applicant’s bank statement must cover at least the last 6 months.
#3. Compare different lenders
- Some websites use algorithms to calculate the rates and processing fees that might be charged by each one online.
- Opt for transparent institutions without any hidden charges.
#4. Submit your application
- Look for an online application form on their website.
- After getting it, fill in all required fields. Follow the instructions given and upload the document.
#5. Approval and disbursal
- Directly enter your bank account details after your application has been approved. The funds would have been credited.
Key Stats about Business Loans in India
- Annual growth of digital lending in India is anticipated beyond FY 2021-22 at a compound annual growth rate (CAGR) of 36%, according to a report by PwC. This made it easier for people to apply for online loans in India.
- According to its annual report, the FY 2021-22 Pradhan Mantri Mudra Yojana dishoused ₹3.12 lakh crores of loans for small businesses across the country.
In summary
Developing a startup involves deliberate effort, planning, and financial investment, all facilitated by online business loans. The loans made specifically for women entrepreneurs are also easier for female small business owners looking for more funds to expand their businesses.
If you’re ready to take your startup to the next level, start exploring online business loans today. Remember, every great business begins with bold decisions backed by smart financial choices!