It matters little whether you are retailer, a manufacturer, a trader, dealer, distributor or a service provider; you will often come across situations where you will need quick short term business loan to tide over a crisis or grab a business opportunity. The key to seeking funds are tied to getting them quick and fast. While all lenders including banks, NBFCs, and Digital NBFCs have provision for catering for immediate funds, by the nature of operations Digital Fintechs score by the fastest processing of short term loans within a maximum of 72 hours.
What is a short term loan?
Typically a short term loan is designed to augment working capital of a business so that it can sustain its day to day operations and explore or grab business opportunities which may be lost due to lack of adequate funds. A short term business loan is not only important for any business enterprise; it is equally important that the funds are made available in the quickest possible time.
Features of short term business loan:
When it comes to digital NBFC, there are a plethora of pluses helping you with a suitable funding solution. Let us check the primary ones:
- The processing for short term loans is fast, with disbursal assured in three days.
- Being fully online, it is easy to avail.
- The loan is unsecured, and hence, you do not need any collateral security.
- Generous loan amount up to Rs.1C.
- Repayment is customized to the business activity of the enterprise.
Comparison between Short Term and Long Term business loans
|Type||Short Term||Long Term|
|Tenure||Confined to a single year||More than one year|
|Flexibility||Focused on limited usage||Can have multiple uses|
|Rate of Interest||Higher||Lower|
|Scope||To meet daily needs||Caters to the longer perspective|
Eligibility criteria for short term business loan:
The criteria may vary from lender to lender. The ones enumerated are only indicative, and it is prudent to ascertain the actual criteria from the lender of your choice. Let us check out the generic eligibility norms.
- The operational life of the business must be a minimum of one year.
- Minimum annual turnover should be greater than Rs.24L.
As compared to Banks, Fintechs are liberal with documents. Their requirement is confined to bare essentials comprising the following:
- KYC documents including Aadhaar Card and PAN card of the Proprietor and the Business.
- Address proof of the business entity.
- Business Registration Certificate.
- Copy of Partnership Deed.
- Trade License.
- ITRs of the previous 1 or 2 years.
- VAT / GST returns as applicable.
- Audited financial documents of the business.
- Equipment and machinery invoices.
- Bank statement for the preceding 1 year.
- Debtor and Creditor list with details of all transactions.
How to apply for a short term loan?
Lenders in India offer an online facility for loan application. While in the case of traditional lenders like banks, it serves the limited purpose of expression of interest, only and you have to call upon the brick and mortar branch to complete the process. In the case of Fintech, the process is entirely digitized. Let us summarize the process in a few simple steps.
- Step-1: Visit the portal of the lender and invoke the “Apply Now” tab. Fill in all the particulars, which include personal information, business data, and loan proposal information.
- Step-2: Upload the copies of requisite documents and submit the application.
- Step-3: The lender will evaluate your credentials and accord sanction to a fair loan on competitive terms.
- Step-4: Once you accept the terms, the loan amount will be disbursed to the credit of your account.
Rates and Fees applicable to short Term Business Loan:
|Rate of Interest||Variable with rates up to 27% PA|
|Processing Fee||Upfront up to 2%|
|Repayment Method||EMI or fortnightly|
|Tenure||Up to 1 year|
- The need for short term loans is on the rise matching the emerging trends.
- Most short-term loans are aligned to be quick and seamless in a digitized format.
- It is a good option when long term loans are difficult to get; to tide over the emergency needs.
- The entire process of evaluation and vetting of credentials is fast helping the small and medium business enterprises to source quick funds.
- Making a fair assessment of your business is crucial to qualify for short term business loan.