What is the best option to procure unsecured loans?
SMEs are like the wheels of the roller skates, which make India’s economy glide smoothly, and at the same time contributing heavily to the GDP of the country. Most dynamic sector of growth for Indian economy is the SMEs. SMEs put our country on fast track of socio-economic betterment, as an engine of growth, with a high octane push.
SMEs contribute to around 45% of India’s total GDP, which is three times of what big – fat corporates of India do. This sector employs around 46 crore people i.e. almost 35% of India’s population; and is growing at 11.5% annually. Though these numbers are staggering, the importance of SMEs is much more than these numbers to the well-being of India.
Life-cycle of functioning SME
Importance of Working capital
Working capital is essential for any company’s growth. Working capital is like that continuous flow of water that’s necessary for healthy growth of saplings in the rice field. Good working capital ensures that company is running an efficient business line and with a high scope of continual growth.
Options of procuring unsecured loans by SMEs
In case of emerging SMEs, arranging the working capital is indeed another challenge. It’s also a fact that SMEs face a lot of hurdles while trying to procure unsecured loans for working capital and credit line.
Typically an SME owner can reach out to traditional banks or large financial institutions or even their family relatives or the latest addition in past couple of years – the Fintech startups.
Traditional banks/large financial institutions are the age old set-ups, and they follow the same guidelines set many decades back of massive paperwork, lengthy procedures and collateral based capital lending. All of this doesn’t really leave a room for the SMEs to be able to approach these banks, and procure the unsecured loans.
Family relatives may offer the SMEs unsecured loans but at a very high rate of interest or by keeping some gold/land as collateral, which again makes it no-go option for an SME looking for unsecured loans for the working capital need.
Fintech start-ups are the new age digital platforms aimed at offering unsecured loans and credit lines to SMEs with precise credit processing. All this is done with data based algorithms which provides a faster view of an SMEs health and assist with impartial credit distribution. The long application procedures, having a lot of paperwork and collaterals get cut down to minimal, with the use of technology driven scientific data tools that are able to assess the creditworthiness. With the help of these data mining technologies that Fintech start-ups use, they are able to better serve the customer with more precise data driven results for offering the unsecured loans for their business.
With the above description of various options of procuring unsecured loans, it clearly sounds like Fintech start-ups are the best option for getting the unsecured loans.
Let’s understand this better, by comparing features of Fintech start-up and traditional banks
|
Feature |
Fintech start-up |
Traditional Banks |
|
Accessibility |
Quick & hassle free processing of credit applications for getting unsecured loans. Time period of 3-5 working days | Getting unsecured loans for business from Bank, it takes its own sweet time to first sign-off the paperwork and then multiple stage approvals – eventually affecting the SMEs business health |
|
Credit approvals |
Quick credit approval within 72 hours of document submission, basis data-driven algorithms for getting the unsecured loans | Follows the age old process of typically 10-15 working days and various supporting documents to allocate limit for unsecured loans |
|
Interest rates |
Unsecured loans or credit lines @ 1.4-1.6% per month | Secured loans @ 1.0-1.2% per month |
|
Charging method |
Only on disbursed amount and for the period used | For the entire amount offered irrespective of usage |
|
Additional services |
Apart from offering unsecured loans for business, we at Oxyzo help the SMEs procure bulk raw-material like steel, polymer, cement etc. from trusted suppliers | No additional services apart from offering unsecured loans to SME |
The above process comparison makes it very clear that Fintech start-ups are more SME friendly and hence the better option to source unsecured loans for business.
Furthermore, at Oxyzo we offer unsecured business loans in form of specific customized credit lines to meet urgent working capital requirement and assistance in sourcing bulk raw-material material. This has been extremely helpful for infrastructure and manufacturing companies. We are moving to another level by aggregating new business opportunities for SMEs on Bidassist.com. As of date it publishes only government tenders for SMEs to ACCESS IT for FREE, but they claim that they will be adding private opportunities to the platform in another 3-6 months.
From the business growth standpoint, having a handsome amount of working capital at your easy disposal (with the help of unsecured loans this is possible), is the most critical thing for SMEs and entrepreneurs who are starting fresh, with big dreams but not so big pockets.
Submit your credit application today to procure unsecured loans for business and enjoy better growth opportunities for your company/SME. Reach out to us at 1800-102-9586 or mail to contact@oxyzo.in
