What Is A CIBIL Score & How It Affects Your Business?


When you make the transition from being a hard-working employee working under a mean boss or manager to becoming a hard-working and responsible businessman, there are no words to describe your joy.

You have now finally managed to become your own master and get to do things the way you always wanted. You will get returns according to the hard work you put in, and there is no ceiling on your growth prospects. You are willing to work extra hours daily and travel extensively all around, even to remote areas, to get more orders and earn more money.

All this is very much possible, but only if you have the financial resources to keep your business going through various ups and downs. This goes without saying that finances are essential to run a business.

During the initial period, you can use your own lifelong savings and borrowings from friends and relatives to get your small business venture going. But, eventually, you will need access to additional funds as your small business will grow and need more injection of funds. 

Whether you run a manufacturing business or service business, you need investment for several requirements. You need to regularly invest money to finance the purchase of raw material, up-gradation or repair of machinery, pay salary or wages, etc. You need to keep your machinery or equipment always fine so that your products conform to the quality expected by the customers. But what if you do not have money for the same? What can you do in such a scenario? 

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In such a situation the most suitable option for you would be to seek financing from any of the various financial institutions in India. The most popular type of funding options offered by financial institutions to help small business owners is a small business loan. There are various financial institutions offering a wide range of business loan to help you meet unexpected or upcoming business expenses easily.

What is a Business Loan & How to Avail it?

A business loan is a special type of a loan offered by financial institutions in India. This type of loan is meant to help the small business owners meet all their requirements without using up a huge chunk of cash from their finances.

With this facility, you can easily upgrade your manufacturing facilities and improve your profit margins. Many loan lenders, such as banks, NBFCs, and online lending companies, also offer business loans without security. They have also emerged as the preferred option for business owners.

Online lending companies are specialised NBFCs who offer their services through online platforms only, i.e. website and mobile app. They offer a wide range of business loans to meet the requirements of small business owners. These companies follow a paperless process, wherein you only need to provide scanned copies of the documents to submit your application.

With their highly efficient minimal documentation process, they are able to process your application within a few working days only. With their transparent working style, they provide you with regular updates regarding the status of your application. Therefore, you need not go anywhere for the business loan application process; everything can be completed from the comfort of your home/office.

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Online lending companies offer business loans without the security of up to Rs. 5 lakhs, if your turnover in the previous year is more than Rs. 10 lakhs. The maximum repayment tenor that you can opt for is 24 months with an option to foreclose the business loan account without incurring any additional charges. The rate of interest is charged depending on your credit profile.

How your CIBIL Score can help you get a Business Loan without Security?

In the present times, your CIBIL score is of crucial importance to get your business loan application approved. Here are various points that will help you understand the importance of CIBIL score and how it can help you get a small business loan:

  • Most lenders have specified threshold for desired CIBIL score; in most cases, it is required to be above 650. If the CIBIL score is more than the required threshold, it reduces the risk factor for the lender, and he is able to provide you with an unsecured business loan.
  • A high CIBIL score indicates excellent fiscal discipline exercised by you, which every lender is looking for in a borrower. So, you must make sure that the CIBIL score always stay above the required level by the loan lender.
  • Due to lower risk factor lenders can process your application quickly and also offer you the lowest interest rates against your business loan application.
  • If the CIBIL score is below 650, then it will reduce the chances of your business loan application being approved.

It is therefore essential for you to ensure that your CIBIL score stays above the threshold specified by the lenders in their eligibility criterion to get the best business loan offers.

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