Business Loans can be the lifeblood of any business, at one point or other. It takes money to make money in this world, and few businesses can survive through thick and thin without needing any cash injections at some point. This does not mean that the business has to be on the brink of its life cycle when it needs a loan – the loan can be to increase the available capital, expansion or even consolidating the debt together.
It can be a huge challenge especially for small and medium enterprises, and traders to maintain a cash reserve to meet all fixed and variable costs. Traders usually epitomise this struggle – the sales may be seasonal, and there is usually a large number of competitors too. These factors culminate towards an inability to maintain cash reserves to sustain the business at all times, and loans are the best option then.
An unsecured Business Loan may be the best option for traders, especially when they are looking to expand or survive.
There are a lot of challenges that small businesses may face when they are looking for loans. They would need to convince institutions that they are capable of repaying the loan and convince them of the reasons why that loan is necessary for the business to thrive. Financial institutions would need to be confident that the borrower will be able to pay back the loan in time, without any issue – this requires a great deal of confidence in them. A large number of applications usually get rejected because the business cannot offer any collateral in the application. Not all traders have a huge property in their name, and this can be a turn off for many banks when they are offering loans. Even secured Business Loans are sometimes rejected because the collateral offered by the traders I not valuable enough – therefore, convincing the bank that you deserve the unsecured Business Loan can be quite a challenge in itself.
However, it should come as a relief to the many traders that the landscape is shifting quickly. The increased digitisation of the process and an increase in the number of lenders willing to lend to SMEs and traders have led to collateral-free loans being available with relative ease today. Quick funding has increased the chances of small businesses getting funding, while there is an array of SME products which are aimed exclusively at traders and similar small businesses. Other options are also available for people, including working capital loans, terms loans to procure new items for the office or the business and other loans for expansion of the business and the likes. Entrepreneurs are now able to sustain their business through tough times by getting unsecured Business Loans like the Capital First Business Loan, and this has had an impact on the economy of the nation as a whole.
Applying for Business Loan for Traders
While you can always try approaching a bank or a similar large financial institution for the money, the chances that you would get a loan are comparatively low. This is because most banks are reluctant to lend collateral-free loans to small businesses, regardless of their track record. Therefore, the better option for traders would be to try their hand at a FinTech company online.
If you are not aware of the existence of such organisations, you should try to understand a little more about it with some simple online research. FinTech lending organisations are typically non-banking financial companies, who lend money over almost entirely digitised processes.
In most cases, you can approach the company for a loan regardless of whether you are a private limited company, sole proprietary company or a limited liability company. The organisation may ask you for some documents to check your eligibility for the loan since they would need to confirm that you will repay their loan without any hitches too.
The operational history of the business for the past year is one of the most common things that these companies ask of the trader before they disburse the loan. They will need to check if the business is a sound one, or one which is too fragile to invest in. This also confirms to the bank that you are the owner of the company, and have been the owner of the company for some time – therefore, you are capable of running the business well and repaying the amount disbursed as a loan.
Tax compliance is another thing that these organisations check when they are considering your candidacy for the loan. This increases the reliability of the borrower, and they can, therefore, trust in your willingness to repay the loan. You should also have a precise understanding of why the loan is necessary for your business today. The loan requirements must be spelt out clearly, and you should also possess an idea of the tenure you are looking for.
The cost of the loan upfront is something that many borrowers tend to forget. The documentation and processing fees for the loans are usually less than 2% of the loan amount, but it may be larger too. Therefore, you would need to factor that into your calculations too.
An advantage of such organisations is that the processing time for the loans is way less than the traditional method. There is no paperwork involved, in most cases – there is minimal paperwork at maximum. This increased digitisation of the process has meant that traders can apply and get the money they need in a quicker period.
The method of paying the loan back is the same, and has to be done in a monthly manner – equated monthly instalments (EMIs) are the preferred ways. The prepayment and late payment charges are also usually less than that of the competing banks, in this case.
If you are looking to Apply for Unsecured Business Loan, you should check out the many options available in the market. You can also get guidance on applying for the loan with the help of the loan specialists.