A Brief Guide to the Business Loan Disbursement Process

When a loan agreement is signed and all necessary documents and criteria are met, funds are released from the lender to the borrower. This process is known as loan disbursement. Credit screening, application review, and borrower creditworthiness assessment are all part of this process. Know the loan terms, interest rates, payment terms and collateral requirements to make a wise choice when availing a loan. Business loans are available from many banks and reputed NBFCs for financing internal needs from capital expenditure to business expansion.

Before applying for a loan, businesses need to know some critical details. How the business loan disbursement process works and how to expedite it are covered in detail in this article.

Types of Business loans

There are many options for business loans in India, each with its own unique characteristics and specifications.

Business loans can be broadly classified as secured or unsecured. A collateral is required for secured loans, but not for an unsecured business loan. Since the lender of the secured loan must know the value of the collateral, this type of loan also affects the repayment method.

Major types of business loans are  term, invoice financing, flexi, SME, MSME, machinery, cash loans, overdraft facilities, equipment and invoice finance loans which can be secured or unsecured.

Eligibility Criteria and Documents required for business loan

Eligibility:

• Minimum business vintage: 2-3 years
• Annual turnover: INR 10 lakh to 1 crore+
• Consistent profitability
• Good credit score (650+)
• Owner’s age: 21-65 years
• Eligible entities: Sole proprietorships, partnerships, companies
• KYC and company documents

Documents required:

• Business registration certificate
• Financial statements (last 2-3 years)
• Income tax returns (last 2-3 years)
• Bank statements (last 6-12 months)
• KYC documents (ID and address proof)
• Loan application form
• Business plan (if required)

Disbursement Process of a Business Loan

If you are in charge of a profitable company and are looking to scale, one of your ideal options is to obtain business financing. Applying for a business loan online is also the ideal approach to expedite the credit disbursement process.

The lender will follow these procedures when you apply for business financing:

• : Carefully fill the loan application after downloading it from the NBFCs website. You may call the customer care of the lender in case you have any confusion/queries.
• Document submission: Business plan, PAN card, address, bank statement, GST registration, financial statements, and more documents (if asked by the lender) must be submitted.
• Acceptance and sanction of the loan: Lenders proceed with loan approval after they have verified the necessary documentation.
• Loan disbursal: When the loan amount is finally approved and issued, lenders deposit the authorised amounts into the borrower’s bank account.

Follow the below-mentioned two tips to expedite the disbursement of business loans:

• Accurately completing the loan application: Credit delays are often the result of incomplete application forms, so take care when completing one. Accurately and completely fill out the essential info areas. To expedite the financing procedure, it is best to be transparent about your business’s state.

Sincere communication is highly valued by most lenders, therefore not communicating with them can backfire. As a result, disclose any prior defaults or obligations. Additionally, it is ideal to provide an exact quote for the loan amount you want. Completing all of these steps enables lenders to understand your needs, which expedites the disbursement procedure.

• Apply Loan Online: Online lenders can offer business loans with lightning-fast turnaround. They promptly process and accept or reject a loan to complete disbursal based on the borrower’s eligibility. The disbursement time for paperless loans is usually measured in days.

To determine how much you can repay promptly, use a business loan calculator on the lender’s website prior to submitting an online application for financing. Your chances of being approved online may decrease if your financial situation does not align with your desired amount. Additionally, market research facilitates faster loan processing by enabling you to select the loan terms with greater knowledge.

Conclusion

You can get unsecured business loans at a very affordable interest rate through credible NBFCs. You can easily apply for business loans online and take advantage of their flexible repayment plans for pre-approved loans. All the while, these companies have a smooth online process to expedite approval.

Honest communication between you and the lender is important to ensure a seamless loan disbursement process. This allows both sides to express exactly what they anticipate from one another. In doing so, the process will expedite organically.