As a business owner, you should spend hours researching to arrange funds for your company. Many features should actually be in your list for loan funding. Before we get deeper into loan funding, let’s understand what it means.
According to the definition, loan funding is a business loan, which is used to fund working capital or buy a specific asset. Investment can be either short term or long term. Whatever the nature of loan funding, the borrower (a small business here) will have to pay the principal as well as interest on the loan to repay the loan.
In most cases, small businesses prefer short term loan funding over long term. These loans generally have a maturity of 12-24 months and are helpful in meeting the immediate need for money without long term commitment.
Why is it right to take a loan for a short period?
Short term loans are for businesses which are seasonal or when everything is not going well, then they work in the security cycle. Even if the difficulties are small, there is always a risk in the interruption of your earnings. In some cases you have to close the shop. In such a situation, immediate financing is required. Today most lenders have a loan disbursal system, which is quite easy. Just a few days after submitting the documents, money comes to your account.
At times, there is a shortage of funds even on temporary issues, which prevents payroll and other expenses. Or you are waiting for payment from the client. But remember that you also have to pay bills and how much delay will you be able to make? In this case, short term loan is available immediately, due to which the cash flow is maintained and the business also keeps running smoothly.
How to qualify for short term business loan
For a short term business loan, you have to give the correct documents to the bank or any other lender. Eligibility Criteria vary from lender to lender. Since every business is different, the scale of reliability cannot be the same. Therefore, more than 700 CIBIL is necessary. Many lenders have their own credit evaluation process. Documents for unsecured business loans or personal loans are rarely required and the scale of eligibility is also easy.
What is the qualification for taking a non-banking financial company business loan:
– A turnover of at least Rs 10 lakhs in the last 12 months
– Last year’s ITR, which is at least more than 1.5 lakh rupees.
– Either home or business premises should be in the name of the merchant.
– Business premises separated from home.
– Business has been at least two years.
Documents required for NBFC Business Loan: –
– Pan Card
– Last 9 months bank statement
– ITR of last 2-3 years
– Residential proof
– Address proof of business premises
Advantages of short term loan financing: –
For traders who want quick money, their biggest concern is whether it is right to take a loan for a short period. Let us tell you so that all doubts are cleared.
Low interest rates
Short-term loans offer low interest rates at a nominal processing fee. This is a big advantage. In addition, small traders repay loans quickly so they distance themselves from long-term traditional investments offered by banks and other financial institutions.
Short-term loans are beneficial for those who need cash soon. If all the documents have been submitted while filling the form, then the loan is available within 3 days. This is beneficial when you want to overcome cash shortage due to unexpected expenses or any seasonal fluctuations.
Flexibility in conditions and less tedious:
The advantage of a short-term loan is that it provides a lot of flexibility and flexibility. You can also apply for loans online with just one click. Now many lenders have their own website. Apart from this, you can choose the repayment period of the loan between 12 to 24 months according to your convenience. Since you do not have the pressure to add money owed to the lender and interest over the years for an extended period, it keeps you tension free.
Improves cash flow: When it happens in business, nothing can be said. Today is sunny, tomorrow is shade Seasonal fluctuations occur with everyone. No matter how much planning you do, but many times the emergency situation hurts all the hard work. With a short-term loan, you can meet suppliers’ bills and other operating costs.
Help in the expansion of business: As a businessman you want to take your company to the heights of high. You want to rent a big place, hire extra equipment and more people. There comes a time when you are busy trying to spread your business wholeheartedly. But the lack of cash stops you. But whatever plans you have, extra funding is necessary for growth. With a short-term loan, you can take everything that is necessary for the expansion of your business.
Improve credit history
Short-term loans also improve your credit history. Since this type of loan does not have a long repayment period, you repay the money quickly. If you repay the loan on time, then your credit history is better, so that you will be able to take a loan in future.
Short term loans are very beneficial for small business to run the business smoothly. If this loan is not there, you will not be able to take inventory, meet the shortage of working capital nor increase the number and operations of customers. As it is said that even small help fulfils big dreams. So take advantage of it and fulfil your life’s dream.