In the last 5 years, the inclination of Indian business owners towards online financial transactions increased more than ever. For instance, in the digital lending segment in India, digital consumer finance accounted for more than 53% of start-up funding in 2020.
- Further, a report predicts that by 2023, the digital lending segment in India would witness a growth of $100 billion.
One can say that the hassle-free approach and simple steps that accompany the process of availing an online loan work in favor of loan applicants. It works especially in favor of business entities that often resort to online business loans to access funds quickly and with minimum hassles. As a result, each year, more individuals are switching to online lending options.
- So far, in 2020, SME financing accounted for 22.33% of the digital lending segment.
Nevertheless, to understand why applying for an online business loan is a better alternative, one must become aware of the benefits that accompany this process.
5 Reasons to apply for a business loan online
The following reasons highlight why one should consider applying for a business credit online –
Reason 1 – Quick and simple application process
To apply for an online business loan, individuals need to fill up an application form with their personal and business details only. Ideally, the application form can be easily accessed at the online portal of the financial institution.
The entire process is quite simple and requires minimum time and effort, unlike collecting an application form in person from the financier. Regardless, to further streamline the process, individuals must keep a checklist of business loan applications handy.
Reason 2 – No need for physical documentation
Most business loan providers follow a simple documentation process to keep the entire process quick and simple. To facilitate the same, several leading financial institutions also allow individuals to upload scanned copies of the required documents for a business loan on their portal to initiate the verification process.
Typically, financial institutions direct applicants to upload documents like – bank statements, GST returns, and other proofs of business vintage alongside related documents to apply for the loan.
Reason 3 – Transparent lending process
The representatives of reputed financial institutions usually take less than 24 hours to get in touch with a loan applicant, informing them about a loan offer.
Once applicants accept the offer, the lending institution completes the verification process and initiates disbursal. The quick response time and clarity about the business loan offer keep the process transparent and easy to follow up.
Reason 4 – Quick disbursal
Once the verification process of an online business loan is concluded, the sanctioned loan amount is disbursed to the individual’s account within 24 hours. The quick disbursal process comes in handy in more ways than one and helps entrepreneurs to meet their urgent requirements without any delay.
Reason 5 – Attractive interest rates
Leading financial institutions levy attractive business loan interest rate and provide borrowers with simple terms of repayment that help them to pay their debts in time.
Such financial institutions often extend free online tools like a business loan EMI calculator for suitable assessment of your borrowing decision. The financial tool uses this formula to ascertain the loan EMI –
E = P x r x (1 + r) ^ n / [(1 + r) ^ n – 1]
Suppose Samar applied for a business loan of Rs.5 lakh at 12% for 24 months. Using the formula, he can ascertain his EMIs payable as –
E = P x r x (1 + r) ^ n / [(1 + r) ^ n – 1]
= 5,00,000 x 12%/12 x (1 + 12%/12) ^ 3 / [(1 + 12%/12) ^ 3 – 1]
His monthly EMI will thus be Rs.7,512, and the total repayable loan value will be Rs.32,47,902. One can instantly avail this information by entering details like principal loan amount, tenure, and rate of interest.
Financial institutions like Bajaj Finserv provide these calculators along with an amortization schedule for a valued borrowing decision.
They also provide customers with pre-approved offers to streamline the process of availing of a financial product in minimum time. Borrowers can avail themselves of these offers on several financial products, including business loans and personal loans. Check your pre-approved offer online only by entering details like your name and contact number.
Nevertheless, individuals should also find out the rates and charges accompanying an online business loan to make an informed decision. Additionally, they should compare the features and terms of services extended by different lenders to avail the best small business loan online.
