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Tata Capital > Blog > Term Loan > Commercial Finance from NBFCs: A Guide

Term Loan

Commercial Finance from NBFCs: A Guide

Commercial Finance from NBFCs: A Guide

From infrastructure development, employment generation to wealth creation and capital formation, Non-Banking Finance Companies (NBFC) play a formidable role in the financial sector of India. Often the standard-bearer for commercial finance, NBFCs provide financial assistance to various Micro, Small, and Medium Enterprises (MSMEs) at highly convenient terms.

Different enterprises can access a wide variety of commercial finance to maximise cash flow and maintain operational expenditure. These include:

  • Business term loans
  • MSME loans
  • SME loans
  • Machinery loans
  • Working capital loans
  • Overdraft loans

Moreover, commercial finance in India is available to self-employed professionals, private limited companies, sole proprietorship firms, public limited companies, and partnership firms.

Additional Read: Top Benefits of a Term Loan in India

Here is a comprehensive overview of commercial finance from NBFCs:

Application process

There are five primary steps to obtain a commercial loan from NBFCs:

Step 1: Choose a suitable NBFC and apply for a business loan online or offline.

Step 2: Once you receive your eligibility criteria, furnish the requested documents.

Step 3: Next, the NBFC will verify your loan application and furnished documents, usually involving a personal interview.

Step 4: Once the required documents are verified, NBFC approves the loan and starts the loan sanction process.

Step 5: Finally, the NBFC disburses the required loan amount in the bank account of the borrower.

In addition to the application form, borrowers may need to submit a loan processing fee. Also, the applicant may have to pay variable charges, including stamp duty, pre-payment charges, amortisation fee, cheque swapping fee, and more.

Additional Read: Planning to avail a working capital loan? It just may be the best thing for your Business

Eligibility criteria

Eligibility criteria are usually different for different NBFCs. Nonetheless, specific requirements remain the same across NBFCs, such as:

  • Applicant should meet the minimum annual income requirement as a company
  • Company in need of the loan should be business for a considerable amount of time
  • Applicant should be able to meet the age criterion, usually between 21-65 years
  • The business should have an upward turnover trend
  • The company should show only incur profit for the last three consecutive FY
  • The business should be able to deliver a balance sheet audited by a registered CA

Besides, companies should prepare the required documents well in advance and improve the chances of loan approval. An NBFC usually demands the following documents:

  • Filled loan application form
  • GST returns
  • Income Tax Returns
  • All the KYC documents of the company
  • KYC documents of the business owner/owners
  • Company bank statements
  • Balance sheet
  • Board resolution
  • Business continuation proof (Trade license, ITRs)

Once the requested documents are verified, and the loan application is approved, NBFCs start the loan sanction process. Besides, loan disbursement is quicker in case of unsecured commercial loans as compared to secured ones.

At Tata Capital, you can secure tailor-made finance solutions to offset expenses when the profit is slow. Get quick and easy business loans at competitive terms, custom-built to meet your unique business requirements. Enjoy flexible repayment terms and structured EMIs for a convenient, hassle-free loan tenure.

Get in touch for further details.

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