Here Is How Small Businesses Can Get Funds With A Gold Loan

For many of us with an independent spirit and a drive to make it on our own, starting a business venture is the best way forward. Indians are well-known for their entrepreneurial spirit. There are over 60 million micro, small and medium enterprises propping up the Indian economy and contributing to over 30% of India’s GDP.

But starting a business requires finance and capital. So, if you are interested in setting up a business of your own, one of the sources of funding you could consider is a Gold Loan for business. You could apply for a gold loan to start a new business, to expand your business, or even to help you out of a cash crunch caused by delayed payments or unfavourable market conditions.

The loan you can avail by pledging your gold varies and can be as much as INR 5 crores depending on the lender. It also depends on the weight of gold deposited, its purity, the prevailing price of gold in the market and the loan to value ratio.

Suggested Reading: What are the Factors Influencing the Gold Valuation for Gold Loans?

There are several advantages that a gold loan offers comparative to other kinds of loans. We discuss these advantages below:

Simple Processing Formalities:

The gold loan process is rather simple with minimal paperwork. All you need is a proof of identity and proof of address to begin the loan formalities. Several banks and NBFCs like IIFL Finance offer online, instant gold loans. Once you have compared the offering, terms and conditions of various lenders and have decided which one is the most suitable for you, all you have to do is apply online, upload your documents and fill in the required details. Many lenders will send a representative to your doorstep for the valuation and collection of gold you plan to deposit against the loan. Once the gold is handed over and the agreement signed, the loan amount will be transferred to your account in a matter of short time.

Interest Rates:

Gold Loans being a secured loan attract lower interest rates than unsecured loans like personal loans. This is a major advantage. Some lenders offer interest rates on gold loans starting as low as 8% per annum.

No Minimum Credit Score Requirement:

One of the major advantages of a gold loan for business is that you can get the loan irrespective of your credit score. While most unsecured loans require a credit score of 750 and above, there is no such requirement in the case of gold loans. However, do keep in mind, the higher your credit score, the lower will be the interest rate the lender is likely to charge you.

Convenient Repayment Schedules:

Most lenders offer their borrowers a variety of repayment schedules to choose from. Some come with monthly EMIs, some quarterly, some annual. Some lenders will also allow you to pay the interest component on a periodic basis while repaying the principal at the end of the loan tenure. In other cases, you could opt to pay the entire interest and principal at the end of the tenure.

Part Repayment and Recovery Options:

While many loan products like personal loans and home loans make borrowers pay a penalty for early repayments, in the case of most gold loans, there is no such penalty. This is especially beneficial in the case of business gold loans. If you earn more than your projected profit in any month, you can use it to repay the loan partly and bring down your principal amount. In fact, one of the major attractive features of a gold loan is that they often come with a Part-Release feature. You can thus release the pledged gold in parts by making regular installments as per the agreement with the borrower.

In fact, if you think you are ready to start a business venture of your own, or want to grow an existing business and are wondering how to get a gold loan, visit the IIFL website. Scroll through the terms and conditions or request a call back. IIFL offers competitive terms and conditions on its gold loans. Why wait to start your new venture?