India is a thriving economy that is all set to challenge some of the biggest players in the world. Small and medium enterprises (SMEs) are a major contributor to India’s growth and have tremendously helped the country’s economy. The SME industry that once struggled with funds is now accessing loans at competitive business loan interest rates. This refreshing change has only been made possible because of the evolution of digital lending in the country.
The issues of the past
Getting a business loan was a rather difficult and time-consuming process for small businesses in the past. First, these loans required collateral that most small businesses lacked. Secondly, they asked for various documents like a partnership deed, past credit history, balance sheets, etc. Getting approval was hard, and companies with no credit history and poor balance sheets were rejected instantly. Lastly, the disbursements took weeks and hampered the business’s growth.
Getting access to a business loan provider was also tough due to geographical constraints. Small towns and villages had limited creditors. As a result, business owners had to settle for the bank/ lender in their area.
The advent of smartphones and digital lending
Smartphones have simplified many aspects of life, and lending is one of them. With the global shift to the virtual domain, banks and non-banking financial companies (NBFCs) have started offering loans online. Business owners can check the business loan eligibility for different banks and NBFCs online and apply for a loan from the comfort of their homes. Lenders also provide additional services and features like business loan EMI calculators to make the process simpler for borrowers.
The benefits of fintech companies
Fintech companies have helped SMEs get access to high business loans and grow. They have also helped SMEs get past the hassles of low credit scores and no credit history by offering loans to businesses irrespective of their asset base. These companies evaluate the creditworthiness of a company on the basis of various new age factors like social media behavior, future prospects, as well as traditional parameters like balance sheets and profit and loss statements to gauge the company’s performance.
Thanks to newer processes and methods, businesses can now get instant disbursals, low business loan interest rates at no collateral, large loan amounts, transparency, flexible repayment methods and timelines, and a lot more. Lenders, these days, also offer e-KYC where the applicant can submit their personal information online.
Moreover, digital lending has gained a new meaning post demonetization and has made both urban and rural players more comfortable with digital finance platforms.
To sum it up
Digital lending is empowering the SME industry and helping them achieve the unachievable. It is the ideal contactless option in a world where social interactions have now become a menace. Moreover, it is constantly evolving to provide businesses with new and improved services, easy accessibility, and a wonderful customer experience.