Why Should You Opt for an NBFC for Your Credit Needs?

It is imperative for every business to have a smooth flow of funds. From smooth functioning of the business to achieving the long term goals, it all comes down to the availability of funds at the right time. With the sheer amount of lenders, both banking and non-banking, present in the market today, picking the right financial intermediary can be a daunting task. If you are planning on taking a business loan and wonder if an NBFC would be the right choice, read on to find out.

What is an NBFC?

Before we begin to discuss if you should seek a loan from an NBFC, let us discuss what an NBFC is. A Non-Banking Financial Institution, or NBFC as you may know it, is a financial intermediary that offers credit facilities to business owners. While some of the operations of an NBFC might overlap with a banking institution, the NBFC focuses solely on lending money. Established under the Companies Act 2013, the NBFC’s are becoming the predominant source of credit in the Indian market.

Why opt of an NBFC for credit?

Here are a few reasons why it is ideal to opt for an NBFC for the availing a business loan:

Less stringent eligibility criteria:

The banking institutions tend to have strict rules and regulations that the applicant must adhere to. In case of failure, the loan applicant gets rejected by the bank. NBFC’s are popular for having less stringent eligibility criteria when compared to banks. The rules and regulations for lending are lenient, which increases the chances of getting the loan request approved.

Competitive interest rates:

The interest rate charged by a lender is yet another important consideration for every borrower. Gone are the times when interest charged by an NBFC were exorbitant. In recent times, NBFC’s are primarily focusing on offering competitive interest rates to the applicants. The interest charged today is either equal to the banking institutions or competitive to it, nevertheless.

Quick processing:

A majority of people apply for a loan in times of need, and getting a rejection or delay at this point can prove detrimental to the business. Since the eligibility criteria is minimal when it comes to an NBFC, the processing of the application is much quicker. You can get the required amount as and when the need for it arises.

Available for people with poor credit rating:

The individuals that have inadequate books of accounts or poor credit ratings often find it hard to secure a loan from a bank. They might consider it to be a high-risk situation. An NBFC can be a ray of hope for them. The NBFC may offer loans to these individuals, provided the rate of interest will be higher than the industry standard.

Final Thoughts

NBFC’s have transformed the credit market of India. With the growth in the non-banking finance sector and the exemplary performance of the lenders, it wouldn’t be wrong to say that NBFC is the future of lending. If you are looking for a quick and easy loan, you must opt for a Non-Banking Financial Institution.