5 Common Challenges Faced by Business Houses for taking Business Loan in Indiaby Atish Nair Consultant, writer
Most businesses rely on loans for a number of their day-to-day operations. From arranging funds for inventories, keeping up with seasonal demand, or planned expansion, business loans are an excellent way for businesses to acquire the required funds. But while such loans can be used in several ways and can be very useful, getting approved for them is not always easy.
There are several reasons which make the whole process complex, time-consuming, and a lot of times, even after all the efforts, businesses fail to get approved for the loan. Five such business loan challenges are discussed below-
1. Collateral Requirements
Most of the lenders in India require collateral or security against business loans. While this might not be a problem for large corporations, it is one of the most common reasons why SMEs get rejected for business loans. An ideal alternative for such businesses is to look for a lender that offers collateral-free business loans. There are a few top NBFCs in India that ay be of some help.
2. Slow Processing
The processing speed is a major concern when you want instant access to funds for reasons like seasonal demands or an unexpected expense. While the internet has significantly improved the processing speed of loans, they are still not as quick as businesses would want them to be. A business can look for a lender who offers different types of business loans and is popular for quick approvals.
3. Complex Documentation
The documentation is another common reason for businesses to get rejected for loans. Most of the lenders in India have complex document requirements for a loan, making the whole process very time-consuming and challenging for the businesses. Fortunately, there are now NBFCs which are well-known for their minimum document requirements. Consider such lenders for quick and hassle-free processing.
4. Impractical Repayment Options
The financial condition of a business can sometimes be very strenuous. In such a situation, businesses not just need a business loan but need one with flexible repayment options. This would allow them to resolve their financial problems while also ensuring that they make regular monthly repayments. For this, a business can look for a lender who offers high loan amounts for longer tenures at competitive interest rates.
5. Legal Problems
While large companies have a legal team of their own to manage all the legal challenges, it is not a feasible option for small companies. As a result, some of the NBFCs in India now offer legal and technical help to the businesses to ensure complete transparency and convenience throughout the application and repayment process of a business loan in India.
While the challenges are plenty, top lenders in India have eliminated most of them to make business loans accessible to not only large but small and medium sized companies too. If you’ve been avoiding business loans due to the reasons discussed above or have been rejected for a loan in the past, search for a popular NBFC and you might get a loan sooner than you expect.
Created on Sep 5th 2018 02:12. Viewed 403 times.