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Small businesses depend on small business loans to grow their business. However, a lot of times their application for small business loans in India gets rejected. Here is what they can do.

Small businesses need funds to grow; they need funds to cover their short term expenses and to invest for long term in their business. However, the small businesses face a huge scarcity when it comes to availing the loan for small businesses in India and a key problem is a way the traditional lenders have looked at the small businesses for providing them with the small business loans.

Here are some top reasons for rejection and what a small business can do if their application for small business loans in India gets declined.

No Collateral

One of the most common reasons for rejection by the traditional lenders is to reject on the ground of having no collaterals against which they can evaluate the creditworthiness of the small businesses. Since most small businesses operate on a rented or a leased premise a lot of small businesses find their small business loans application rejected by the traditional lenders.

The right way to overcome such rejection for the small business loans in India is to apply for an unsecured business loan with the top digital lenders. Some of the top digital lenders like Indifi offer small business loans in India that are based upon the business transactions of the small businesses. For instance a retail shop can get the loan for small businesses in India by evaluating their transactions against the card swipe machines and payment wallets; similarly, other small businesses can get the unsecured small business loans from the traditional lenders and not worry about getting rejections on their small business loans applications.

Short Term Requirement

Another major reason for rejection that the small business face for small business loans in India is that they have a short term requirement and it does not fit the product that the traditional lenders offer. Traditional lenders offer loan for small businesses in India that have a standard repayment schedule and a lot of small businesses have requirements that are very different. For instance the travel agents need funds to take bookings for their corporate clients and while they have to pay to the airlines and travel aggregators in advance, they need to offer a small credit window to the corporate to process their payments, which creates a working capital gap that stops the travel agents to acquire new business and grow and this also becomes a big reason for the rejection of their small business loan applications.

The small business like the travel agents can then reach out to the digital lenders like Indifi who have specialized products for the short term requirements like these. Travel agents, for example, can get a 7-day loan for small businesses in India from Indifi to pay for their bookings and eventually grow their business and earn more margins.

Repayment Concerns

A lot of small businesses face the dreaded news of their small business loan application getting rejected on the grounds of the assessment by the traditional lenders, which says that the small businesses might be unable to pay the equated monthly installments for the small business loans in India as their business pattern is not regular and there are frequent highs and lows in the business.

Such a rejection for their small business loan applications can be overcome by applying for specific products that are created by the digital lenders for specific small businesses. For instance, the small retail stores can get a small business loan in India from the top digital lenders like Indifi against a product known as Merchant Cash Advance, which is essentially a loan against the card swipe machines. The best part of such a loan is that the small businesses do not have to worry about paying regular EMIs and the repayment is connected with the business transactions. Thus, a small amount gets deducted against every consumer transaction and the small business needs not to worry about the regular EMIs any more, it gets integrated into the business and the small business loan gets paid on its own and on most occasions the retail businesses end up paying for the small business loan in India much earlier than the scheduled repayment period without paying any extra charges for the same.

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