How To Apply For Online Business Loan: Complete Guide And Benefits Of It
To run a business, you need funds and resources. You need funds for both the running and expansion of the business. You can apply for an online business loan depending on your business needs.
There are multiple options with varied business loan interest rates. With quick disbursal and processing, business loans are a great option. But there are various aspects that you should know about an online business loan.
In this guide, we have shared the complete information on an online business loan. The business loan interest rate is also low, making it a great option.
Understanding Online Business Loan
A business loan is an amount available to meet the business expenses. It is both a short-term and long-term loan. The main aim of the online business loan is to help infusion funds for business quickly.
You can use the business loan to:
- Expand
- Meet daily expenses
- Buy new machinery
- Expand staff
- Conduct research
- Start a new line
The business loan interest rate depends on the following:
- Amount
- Nature of the business
- Tenure
- Credit score
The online business loan offers you transparency. It requires minimal documentation. The business loan can be both secured and unsecured.
- Secured loans are those backed by collateral or guarantee. You can pledge property, government securities, savings accounts, fixed deposit certificates, gold, or other assets. It should be under your or your co-applicant name.
- Unsecured loans are offered solely based on creditworthiness. The income, documents, business tenure, and other factors are considered while sanctioning this loan.
Factors affecting Online Business Loan
An online business loan is affected by multiple factors. This includes:
- Your credit score is a primary factor considered.
- The nature of the business determines the loan amount too.
- The annual turnover of the business plays a crucial role.
- The business debt-to-income ratio should be 50% minimum for approval.
Top types of Online Business Loans
There are three main types of online business loans:
Term Loan
A term loan is a short-term loan. You can use this loan to meet daily expenses. The business loan interest rate of the term loan is comparatively low.
Credit Line
A credit line is similar to a credit card. You will be issued a credit limit for your business. You can withdraw money if necessary and use it for business.
Invoice Funding
It is also called bill discounting or invoice factoring. It is used by small firms when there is a delay between issuing invoices and receiving payments from clients. You can get an advance based on invoice value.
Documents required for an Online Business Loan
The documents required for an online business loan are very basic. The documents include the following:
- Fill out the application form online.
- Proof of identity
- Aadhar card
- Passport
- Voter ID
- Driving license
- Proof of address
- Aadhar card
- Passport
- Voter ID
- Driving license
- Proof of income
- Latest ITR
- Bank statement for the last 6 months.
- The PAN card is a mandatory document.
- Proof of business continuity
- GST Registration
- Trade License
- Copy of partnership deed
- Registration Certificate issued by RBI or SEBI
- Certificate of Practice
- It will need you to submit the latest audited financials if asked.
Benefits of Online Business Loan
There are multiple benefits of online business loans. The primary benefits to enjoy are:
Paperless application
An online business loan is a paperless application. You are not required to fill out any long application forms. You can go to the website or mobile application and give the required information. You can complete the application as per comfort.
Repayment tenure
The tenure of the online business loan is around 36 months. You can repay the amount in instalments or prepay the loan if you wish.
Simple eligibility
The eligibility criteria for a business loan are very simple. You should be 23-65 years of age. The business should have been running for the last four years. In the case of a new business, you should own a previously successful business. You can be self-employed non-professional, or professional.
Quick processing
Online business loans are processed fast. Once you submit all the details, the request is taken into processing. Once the request is approved, the amount is disbursed within 24-48 hours.
No collateral needed
Most online business loans do not require collateral. It is for an amount of up to INR 10 lakhs. You are not required to put in any guarantor to secure the loan you have applied for.
Multiple choices available
There are multiple options available for the borrower. You can apply to any of these depending on your need. You can get a term loan, working capital loan, credit line, or invoice funding.
Fees and interest rate
The business loan interest rate is very cost-effective. Also, the processing fees are quite nominal. The rate charged by other moneylenders is very high. You can meet your business needs without having a high cost. The interest rate is around 17% PA.
Builds credit history
Applying for an online business loan helps to build a credit history. Timely repayment of the EMIs can improve prospects of acquiring high-value loans.
Process to apply for an Online Business Loan
The process to apply for an online business loan is very simple. You just need to have your documents and a stable internet connection. The following are the steps:
- Visit the lender’s website.
- Fill in the information in the online application. Make sure it is accurate.
- Upload all the necessary documents. Ensure to keep the images are legible.
- Wait for some time till the lenders go through the documents.
- Once the papers are verified, you will get approval.
- Get the loan agreement signed.
- Submit the document back on the portal.
- The money will be disbursed to your account within 24-48 hours.
Conclusion
Online business loans are a boon for business owners. It offers hassle-free and quick funding to meet immediate business needs. The documentation process for the business loan is quite simple. Also, the business loan interest rate is quite friendly.
This a great option to meet your immediate financial needs. It is offered without any security and with minimal documentation. It supports business expansion.
You can apply for an online business loan from your mobile or laptop. To get more information on the same, you can visit Piramal Finance. The loan process is transparent, saves time, and is convenient.