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Are NBFCs Better for Business Loans than Traditional Banks

Are NBFCs Better for Business Loans than Traditional Banks?

What Makes NBFCs Better for Business Loans than Traditional Banks?

The dependency on conventional banks as a business owner is well understandable. Since few companies are able to weather erratic economic cycles and deal with challenges without obtaining a business loan. Additionally, those seeking to grow their operations and develop their enterprises go to traditional banks to obtain business loans.

The majority of small firms are unable to obtain loans from traditional banks because of the strict lending policies. They therefore struggle to meet their needs for working capital. However, things have drastically changed since Non-Banking Financial Corporations (NBFCs) started to appear on the Indian market.

In recent years, NBFCs and conventional banks have collaborated to offer business loans. They have assisted countless business owners in realizing and fulfilling their ambitions. Let’s examine the benefits of using an NBFC rather than a conventional bank to obtain an unsecured business loan:

  • Eligibility Criteria

The most obvious benefit of selecting an Non-banking financial services over a bank is the easy eligibility criteria. Banks typically have strict requirements before granting business loans. When approving requests for business loans, they adhere to a rigid verification process and need extensive documentation.

In contrast, NBFCs have more permissive, flexible eligibility requirements for approving loan requests for businesses. To make sure that their customers can easily obtain finance, they adopt a lax approach. Even with a low credit score and no business experience, one can still easily qualify for a business loan from an NBFC.

  • Interest rates

Most loan applicants are concerned with the interest charges placed on their loans. A heavier financial burden is produced by increased interest rates, which raise EMIs. NBFCs provide business loans at cheaper interest rates than conventional banks do. When business owners take out a loan from an NBFC, it signifies that they are under less pressure.

Because NBFC interest rates are determined by the Prime Lending Rate (PLR), which is not governed by the Reserve Bank of India, they are likely to be lower (RBI). As a result, they have more freedom and can change the interest rates on their business loans to draw in more clients.

  • Digital Process

Hard copies and physical paperwork have very little room in the modern digital world. The majority of NBFCs have begun providing completely paperless business loans with the aid of online platforms. They have evolved into digital financial technological companies by fusing finance and technology.

Business owners can access financing through these Fintech companies without leaving their homes or places of employment. They only need to go to the lender’s website or download one of their mobile applications to submit an application for an online business loan. They can submit digital copies of the necessary documents, and within 24 hours, the money will be paid to their bank account.

  • Disbursal of funds

As was previously noted, obtaining business loans from banks entails a rigorous verification process and extensive paperwork. NBFCs, on the other hand, adhere to somewhat laxer lending terms. They have a lenient eligibility requirement and minimal paperwork. The rapid disbursement of their company loans is the result. This enables business owners to quickly obtain money when they are in need.

  • Loan Limit

In India, a number of NBFCs offer business loans with pre-approved lending ceilings. Owners of businesses may take money out of this lending cap as needed. It’s vital to keep in mind that only the amount used by the business owner is subject to interest, not the whole loan maximum accessible to that person.

1 Click Capital is one such NBFC that offers payroll funding to business that are in need of payroll financing. We are a trusted lender that deals with minimum paperwork and quick disbursal to everyone in need.


India’s first ever digital portal to offer payroll funding, making every business owner’s dream possible through everyday capital realities.

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