Know More About Online Business Loans

The process of applying for an offline Business Loan can be complicated when compared to online channels. The real purpose of a Business Loan is to provide an entrepreneur with funds to operate and manage various business needs. It is recommended to analyse, plan and understand the Business Loan process before applying for a smooth financial journey.

In this article, we will discuss online Business Loans in detail, so you get complete clarity on the same. 

What is a Business Loan?

A Business Loan is a financial instrument specifically designed for business purposes. They can be both secured and unsecured. Business Loans can be based on both cash flow and revenue. Cash flow financing is ideal for organisations that generate significant sales but don’t have much collateral to offer. Revenue-based financing is ideal for companies with a lot of physical assets, such as equipment, that can be used as collateral for a loan. Loan providers consider a company's age and turnover to assess its credibility in the market apart from credit score and other important factors.

The Right Time to Apply for a Business Loan

Whether your small business started only 3 years ago or has been around for a decade, loan providers connect this aspect to the reliability of your venture. This is one of the key factors in assessing the eligibility of your loan application. Here are a few scenarios that will help you to estimate an ideal time to apply for a Business Loan online.

• When you take your business to the next level by taking on a new lease, or office space to add to your existing processes and staff. It also requires a lot of equipment, machinery, and infrastructure to add new avenues to your existing business.  
• When you want to expand your business, and need finance, a Business Loan can help. The funds can be used for research and development of new products, acquiring another business with an established base or marketing the business in newer locations.
• Companies often require funds to hire hands-on industry experts and influential individuals to enhance their brand image. Retaining these professionals requires finances that companies can fulfil through Business Loans.

Here’s a Quick Guide on Applying for a Business Loan Online

Understand the Types of Loans

A necessary first step when considering a Business Loan is knowing its types: Term Loans and Working Capital Loans. Depending on how you want to use the funds, you can choose from the suitable loan option with appropriate repayment tenure and other favourable terms.

Analyse Loan Offerings

Before applying, you should always research different loan products and their terms. The Internet has a lot of information regarding loan types and their terms. 

So, before reaching any conclusion, it is important to study everything about Business Loans online in detail. For example, the business loans offered by Clix Capital are gaining traction due to the ease of application, faster processing and quicker disbursals. You can also use their Business Loan calculator to pick the loan amount, tenure and interest rate as per the EMI you can pay. 

Study Your Financial Statements

It is the stage when your business needs the assistance of an accountant. Ensure all financial statements (balance sheet, income statement, cash flow) are complete and updated. Whether or not your loan is approved depends on how healthy your business finances are. Maintaining a transparent business sheet will make the loan process smoother. 

Low-risk Profile

Whether your loan application gets approved depends on how safe the loan provider feels. Examine your credit and risk profile. It assesses whether the business has sufficient cash flow after all ongoing liabilities have been accounted for. NBFCs usually consider the CIBIL score and the CMR score to estimate the creditworthiness of a Business Loan borrower.

Documentation and Filling out Online Forms

To complete the information accurately, have your supporting documents with the necessary personal and professional details ready to save time.  

Go to the website of your preferred lending institution, provide your mobile number and validate it with OTP. Fill in the name, email, pin code, and amount required for a loan to complete the first phase of applying online.

Once the application is filled and submitted, their team will contact you for the next steps to be followed for verification and approval. 

Terms and Conditions

You must look closely at the terms and conditions of a loan to determine if a loan makes sense for your business. Find out if it's a variable or fixed rate loan and how often you will be charged. What is the borrowing period? Make sure you are comfortable with how the principal will be amortised over the life of the loan. Investigate the nature and amount of fees associated with financing while applying for a Business Loan online (contract, closing fees, administration or processing). Also, research loan default terms in advance so you can recognise them and avoid them. 

Conclusion

The process of obtaining a Business Loan can be very simple or challenging, depending on your business's financing, the lending institution you are applying to, and how you plan to use your Business Loan. When you apply for unsecured Business loans with NBFCs, you do not need to mortgage any collateral for the loan. The time taken from the application to disbursal is also quicker than with secured loans.