Every year many startups are launched and propelled in India. As India is a country of young people, there are really a great number of youths who come up with excellent business ideas every year. But sadly most of the business dies in silence while only a few can survive. Almost 90% of the new businesses fail and prime reason behind it is the lack of fund.
It is very unfortunate to mention that the number of NPAs are increasing every year for both national and private banks. This increasing NPAs have made the banks become more stringent in the eligibility criteria to sanction a business loan. Banks have stopped providing business loans without collateral or an asset to secure the loan. Additionally, to make your business loan successful, you need to provide a pile of documents to the lender. The lender verifies each and every document before it sanctions the loan which takes a minimum of 30 to 40 days to disburse.
A parallel way of business financing is FinTech lenders. A FinTech refers to the entities who work in finance but the way of functioning is unlike to the traditional lenders. These companies are fueled by technology and these are the progressive vision of banking. FinTech companies easily provide business loans for the SMEs and MSMEs hence can be used as the alternatives of bank loans.
The process of gauging the loan eligibility in a FinTech is different than traditional banks. The traditional banks determine the eligibility of a business loan is by checking the loan application, credit score, the age of the business, the net worth of the business, the revenue, your business plan or the value of the collateral you want to upfront. But a FinTech company does not take those parameters as the only way to gauge the creditworthiness of a business loan applicant. FinTechs take every applicant as an individual case and don’t follow a fixed set of eligibility criteria. Because of this the same, more and more business loan applicants are able to avail a business loan successfully.
A FinTech comes with many other additional advantages which makes it a better option than a bank loan.
Advantages of a FinTech Business Loan
- Minimal Paperwork
when you apply for a business loan from a traditional lender, you are to submit a pile of documents in its physical form. FinTech companies are different as they never demand physical documents. You just need to upload the soft copies of essential documents and that will be considered enough to support your loan application.
- Faster Turnaround Time
The turn around time of a traditional bank loan is 30 to 45 days. Waiting for a such a long time to get the loan amount can never be accepted by the business persons of the 21st century. Most of the new age businesses are done online which make them function in a faster way. The needs of those businesses should be fulfilled without much wait.
- No Hidden Charges
A FinTech business loan carries a crystal clear processing. You will never find any kind of hidden charges on your loan while applying for the same through a FinTech. Most of the banks try to drain your money in different ways such as forcing you to buy insurance and so on. Such type of insurances are never a part of your loan but just to earn more profit, the lender sells such products along with loans.
- 100% Online Processing
A business loan from a FinTech follows an entire online procedure. Because of being online, the loan seeker neither needs to visit the lender’s office nor needs to submit physical documents. Those conveniences of an online business loan make it a better choice for the business personas who lacks in sufficient time for carrying out hassles of the loan procedure.
- Collateral Free Loan
The best about a FinTech business loan is being collateral free. But if you want to avail a business loan from a traditional bank, providing a security is a must. Even the loan amount which you will receive depends on the value of the security. An online business loan is different. If you avail a business loan online, you will be free from the burden of keeping your asset in lien to get approval on your business loan.
- No Prepayment Penalty
Almost all kind of credits attracts a prepayment penalty which is a certain percentage of the loan outstanding amount. But this new age technology based lending organizations don’t levy such penalties. If the borrower can manage to pay off the loan ahead of time, they can pay off the loan without any penalty or extra charges.
The FinTechs nowadays have become the lifeline of a number of SMEs. These algorithm based lending system has stood by a huge number of start-up businesses and helped them to survive. India has a great number reasonably strong businesses but these are forced to get vanish within a year or two just because of lack of fund. To the relief of those startup business ventures, a FinTech business loan is the most favourable option.