For almost 50% of the large business owners in India, the last few months have been particularly stressful. According to a study conducted by the India Ratings and Research, 240 of the 500 largest corporate borrowers in India are under stress to pay back the loans they had taken from banks and will require refinancing to the tune of almost rupees 1.4 lakh crores to be able to service their debt . (Source: ET, 21/06/16)
Whatever the reason, this type of chaos leads to a SMB credit crunch where small business owners associated with such corporates also start finding it difficult to secure credit from large banks. A larger and more vexing issue is – many small business owners dip into savings and take away from their future nest eggs to continue running their shops.
Small business owners depend significantly on personal savings, retirement savings or capital borrowed from their family and friends over traditional sources of funding such as bank loans, bank credit lines or NBFC loans.
However, the reality is, money is still out there and small business loans are still accessible. To start with, bank loans are considered to be the cheapest source of debt financing for your business. Bank loans are available at favourable rates because the cost of capital for bank that accept your deposits is much lower than the cost of capital for most NBFCs that in turn borrow money in wholesale (many a times from banks) to lend to you. That being said, for most banks their stringent credit policies lead to high rejection of small business loan applications and the process is quite tedious.
Alternative online financing is on the rise and companies like CoinTribe link to multiple lenders and leverage technology to expediting and simplify the loan process. So what you get is – loan applications take only minutes to complete and funds are issued in a matter of days. Plus, you can explore different options and find a product that fits your unique needs.