How Is A Business Loan Disbursed?
Every entrepreneur wants an ideal business loan product with quick loan disbursal. Get to know how a business loan is disbursed in detail at IIFL Finance.
This blog highlights the steps included in the disbursal of the loan amount.
What Are Business Loans?Lenders such as banks and NBFCs offer business loans to retail business owners to cover company expenses. Such expenses may range from working capital, buying real estate, marketing, or expansion. However, like other types of loan products, entrepreneurs are liable to repay the loan amount offered through the business loan disbursement process with interest to the lender.
Business loans are the best choice for entrepreneurs owing to numerous benefits, which include the following.
1. Immediate Capital:Business loans allow companies to raise quick capital with an application process hosted entirely online.
2. Nominal Interest Rates:Business loans include affordable and attractive interest rates to avoid creating a financial burden on the borrower.
3. No Collateral:Business loans do not require pledging assets as collateral to qualify for the loan. However, all of the above benefits are possible after the lender successfully fulfils the necessary criteria for a business loan. Hence, it is important to understand the business loan disbursement process.
How Is Business Loan Disbursed?Every entrepreneur wants an ideal business loan product with quick loan disbursal. However, numerous factors affect the loan disbursal process. The factors included in disbursing the business loan amount into the borrower’s bank account are as follows.
1. Eligibility CriteriaLenders do not need to pledge any asset as collateral while taking a business loan. Since there is no collateral, it becomes risky for lenders to offer the loan amount as a borrower can default in repayment.
To mitigate losses, lenders have set an eligibility criterion that borrowers must fulfil. The fulfilment of the eligibility criteria is essential in the process of disbursal of the loan amount. If the borrower fails to satisfy these standards, it may lead to loan rejection.
2. Loan Application FormLenders require borrowers to fill out a loan application form. The application form includes entering basic information about the borrower to ensure transparency. The borrower must fill out the loan application form with the utmost care, as any mistake in filling in the form may lead to loan amount disbursal rejection. Once all the details are filled in, lenders review the application within the process of disbursal loan.
3. KYC DetailsKYC, or Know-Your-Customer, is one of the most significant factors in disbursing the loan amount. The KYC aspect is included in the loan application form and requires the borrowers to submit various documents to prove their address and legal identity. While filling out the loan application form and ensuring a successful disbursal of the loan amount, the borrowers must submit all the required and relevant documents.
4. Bank DetailsOnce the borrower has filled out the loan application form and submitted all the KYC documents, the lender reviews all the details to create a legally binding loan contract. Then, the lender disburses the loan amount to the borrower based on the desired loan amount, interest rate and loan tenure.
However, the borrower must provide the correct bank account details for the lender to disburse the loan amount. The loan amount is finally disbursed into the borrower's bank account if the details are correct.
Avail Of An Ideal Business Loan From IIFL FinanceIIFL Finance is India’s leading financial service provider, offering comprehensive business loans to business owners. IIFL Finance business loan provides instant funds up to Rs 30 lakh with a quick loan disbursal process online and minimal paperwork. The loan is disbursed within 48 hours of loan approval into the borrower’s bank account. The business loan’s interest rate is attractive and affordable to ensure the repayment doesn’t create a financial burden.
Q1: What are the documents required to avail of a business loan from IIFL Finance?
Ans: The required documents for a business loan are as follows.
• Established business operating for more than six months at the time of application.
• Minimum turnover of Rs 90,000 in the last three months from the time of application.
• The business does not fall under any category or list of blacklisted/excluded businesses.
• The office/business location is not on the negative location list.
• Charitable organisations, NGOs, and trusts are not eligible for a business loan.
Q2: What is the interest rate for taking a business loan with IIFL Finance?
Ans: The interest rate for IIFL Finance business loans ranges between 11.25%-33.75% depending on the loan amount and the loan tenure.
Q.3: What is the maximum loan tenure for an IIFL business loan?
Ans: The maximum loan tenure for an IIFL business loan is five years for a loan amount of up to Rs 30 lakh.