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Tata Capital > Blog > Loan for Business > Top Reasons to Avail an SME Loan from NBFC

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Top Reasons to Avail an SME Loan from NBFC

Top Reasons to Avail an SME Loan from NBFC

Taking SME finance, which is a type of business loan from a banking institution, is a serious decision. At times, the process can be slow, and paperwork can be extensive. This is where NBFCs can come to your aid. If you don’t know what NBFCs are, check out our next section.

What are NBFCs?

NBFC stands for Non-Banking Financial Companies, which are financial institutions that provide certain banking facilities but don’t possess a banking license by RBI. However, that does not mean that these institutions are not safe or illegal as they have been recognised by RBI and are registered under the Companies Act, 1956.

These institutions provide services such as loans and credit facilities but are not bound by the same rules and regulations as banking institutions. These are some examples of Non-Banking Financial Institutions:

  • Investment Banks
  • Money Market Funds
  • Chit Funds
  • Insurance companies
  • Mortgage Lenders
  • Hedge and Private Equity Funds

Reasons to avail an SME loan from NBFC:

Flexible interest rates

If you are considering an SME loan for your business, start by looking for a lender that can provide lower rates of interest. Several NBFCs offer business loans for SMEs at competitive interest rates. In addition, they can also offer more flexible EMI payment terms.

Relaxed eligibility criteria

One of the key reasons to avail a loan from an NBFC is that unlike banking institutions, NBFCs have easier eligibility criteria. This obviously makes the whole borrowing process faster and simpler.

Moreover, if you have a low credit score, then your chances of getting a loan are much higher at an NBFC than a banking institution. Therefore, a small business owner across various verticals can easily get a loan for business approved by an NBFC and ensure they don’t run out of SME working capital.

Quick disbursal

Banking institutions generally take a long time to sanction a loan, as the process requires extensive paperwork. Owning a small business means that you might be in urgent need of a loan and thus, require speedy processing and approval.

In this case, reaching out to an NBFC is a great option as they require minimal documentation and have relatively more relaxed eligibility criteria. This is the reason NBFCs are much quicker in their process and provide quick disbursal of SME loans to borrowers.

Additional Read:  Guide for First-Time SME Loan Applicants

Looking for the Best SME loan provider? Tata Capital is at your Aid

Tata Capital is one of India’s leading Non-Banking Financial Company registered with the Reserve Bank of India. We offer fees and fund-based financial services and have created a brand that is synonymous with trust.

Additional Read:  Benefits of applying for an SME loan by Tata Capital

So, what are you waiting for? Get SME finance for your business at the best business loan interest rates with Tata Capital. We also offer loans with minimal paperwork and flexible repayment terms. To know more, get in touch with us today!

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