How To Get Hassle-Free Business Loan To Fulfil All Your Business Needs

Agriculture, as we all know, is the backbone of our country. Well, a few more years later, the word could be replaced with entrepreneurs. Such is the advance that the country’s workforce has made in advancing the economy.

Entrepreneurs need a good inflow of money to run their business operations and achieve their goals. Though funding from angel investors plays a key role in the entrepreneur ecosystem, business loans are equally important to fulfilling entrepreneurs’ business financial needs.

In a business landscape like India, where the rise of entrepreneurs is one of the fastest in the world, hassle-free business loans could come in handy for entrepreneurs who do not have assets or valuable items as collateral.

Growing Market

To put things into perspective, India has emerged as the third-largest ecosystem for startups in the world, with over 99,000 Department of Promotion of Industry and Internal Trade (DPIIT)-recognised startups operating across 670 districts of the country as of May 31, 2023.

A total of 109 of them are unicorns with a $1-billion market value. The government has recognised startups solving problems in as many as 56 diverse industrial sectors with 13 per cent from IT services, nine per cent from healthcare and life sciences, seven per cent from education, five per cent from agriculture, and five per cent from food and beverages.

With such a vast pool of entrepreneurs and a wide variety of sectors they cater to, it is necessary that they grow their businesses to advance the country’s economy.

So, what is a hassle-free loan? It’s when a businessman doesn’t need collateral. In other words, the person need not pledge an asset or a valuable item as security against the loan.

Partial repayments, interest only on the utilised money and not on the entire borrowed amount, quick approvals, and instant disbursals are some of the distinguishing features of a hassle-free loan.

Factors to Consider

While eligibility is an important aspect while applying for any loan, you also need to be prepared with all the documents required for the application. Here are some of the factors you need to keep in mind before applying for a business loan:

1. Low CIBIL Score: A CIBIL score of 700 or above can get you a loan easily.

2. Business Registration: A lender will consider it an authentication of your business. There are high chances of the loan application being rejected if your business is not registered.

3. Documentation: KYC documents such as the Aadhaar Card, PAN Card, and other details such as establishment details, income proof, and bank details are the most common loan documents.

4. Future Plans for Business: A lender wants to know how you will earn money through your business establishment. They don’t want their money to be stuck.

5. Loan Terms and Conditions: As a borrower, you need to make calculations about how you will repay your loan. For that, you have to see what different lenders are offering. You need to make a thorough search for factors such as interest rate, duration of loan, EMIs, loan insurance, and late penalties.

Besides, having a paperless mechanism to wade through the lengthy documentation work goes a long way in making the process hassle-free. Consider this: You’re in the pursuit of expanding your business and are looking for adequate funding when you stumble upon the idea of business loans. Now, would you want to add more paperwork to your burden? Or would you rather consult a financial institution that offers you easy access to the loan? Food for thought, isn’t it?

Types of hassle-free business loans

There are many options available for hassle-free loans in the market and you can pick the best-suited one depending on your type of business, the purpose of the loan, terms and conditions, your repaying capacity, etc.

Some of the prominent hassle-free business loan types are:

Working Capital Loan, Overdraft Facility, Term Loan (Short and Long), Letter of Credit, Bill/Invoicing Discounting, Loans Under government schemes, POS Loans or Merchant Cash Advance, and Equipment Finance or Machinery Loan.

Besides, some government loan facilities are specifically centred around startups and entrepreneurs. Some of them are the Pradhan Mantri Mudra Yojana, Credit Guarantee Scheme, Stand Up India Scheme, Bank Credit Facilitation, Coir Udyami Yojana, and Market Development Assistance, among others.

(The author is co-founder and CEO of Sugmya Finance Pvt Limited)