6 Reasons Why Business Owners and SMEs should Approach FinTech Lenders for their Fund Requirement Fast turn-around time, minimum documentation, flexible and competitive interest rates are some of the main reasons why Fintech is ideal for business owners, when in need of funds
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Fintech Lenders are the financial institutions that offer business loans to entrepreneurs with minimal documentation and process time with maximum loan amounts and flexibilities. There has been a giant leap in the growth of Fintech companies in India between 2015 and 2018. Mumbai is the first place with many Fintech startups, Bangalore, Delhi, and Hyderabad follows.
What is different about these Fintech companies and why is it ideal for business owners to approach them for their funding requirement is the discussion happening across India. These companies do away with the huge interest rates and unrealistic demands placed by private lenders. Also, they are not as rigid as banks in terms of documentation and processes.
Chief reasons that cause Business owners / SMEs to approach Fintech lenders for their funding needs:
1. Fast turn-around time - With the latest advancement in technology, Fintech lenders are now able to offer business loans within 48 to 72 hours, depending on the credit history and the KYC of the applicant. Mainly AI, cloud computing, IoT, and Blockchain are the technological advancements that make these lenders to quickly process every loan application and approve the money. These lenders are time efficient and make sure that they take care of the deadlines of the applicants of when they require the loans and never fail to meet their goals due to lack of money.
2. Flexible and competitive interest rates – Fintech lenders mostly work on the cashless model and the transaction happens via cards allowing business owners to take control of the situation to focus on their business. The growing competition among the Fintech lenders makes them offer competitive interest rates and hence the business owners have options and can choose from the best. There is wide choice open in the market and rigid interest rates no longer exist.
3. Minimum documentation - The new age Fintech lenders boast for paperless transaction making the process completely digital and hassle free. Their mobile apps and web process allows entrepreneurs to get money in one click. Digital DNA is embodied and data utilization is carried out in the smartest form. These lenders ask minimum information while dealing with the applicants and their financial requirements, small plans explaining the need suffices the lenders to release the payment. Quick disbursal of money helps small business owners to keep their business rolling. They can utilize the money for the purchase of equipment or improve their working capital and it is at their discretion.
4. Loan ticket-size - A lot of these Fintech lenders offer loans from as low as 50000 INR to maximum of 50 lacs. This provides elasticity to the owners to plan their funding need as and when they require as there is no hard and fast rule.
5. Credit profiling - Credit history is another threatening factor that holds a business owner from getting a business loan. It is not always possible to have a clean history and Fintech companies understand this. Hence, they do not consider credit history as the only factor to approve the loan. They always provide loan considering other factors and create a chance for business owners to work on their credit history.
6. Flexibility - There is no worry about collateral and prepayment penalty when Fintech lenders are approached for a business loan. Yes, they are indeed flexible and do not look for any security. Basic details of the business person are verified for approving the loan. Also, if the borrower can repay a loan before the said time, then they are most welcome to do so. They need not fear prepayment penalties. Thus they can start another fresh loan for a bigger amount to expand their business.
Looking at the current development of the industry / market, Fintech Lenders are now also getting into 100% branchless model and loan seekers can complete the entire process online. Within this model, the applicants can seek loan to start their business in any city big or small across locations in India. This paves the way to business owners initiating a business set up anywhere in India.
Fintech lenders are no longer holding back and are also tapping regions for their expansion that can in the future have a potential of growth. The initiative collectively is going to prove beneficial for a lot of emerging SMEs and MSMEs in India who face cash crunch when required the most.