How NBFCs in India help Small Businesses Acquire Loans

How NBFCs in India help Small Businesses- Instamojo Blog
(Last Updated On: February 23, 2022)

NBFCs in India are growing to be the most preferred lender for Small business loans – but do you know why?

NBFCs in India (Non-Banking Financial Company) are the second largest provider of micro-credit for small businesses, accounting for over 30.2% of the total industry.

In this article, we will discuss what is an NBFC, how you can choose a small business loan from an NBFC and the top 3 NBFCS with the best loans for small businesses.

What is NBFC?

Non-banking financial companies (NBFCs) are financial institutions that offer banking services but do not have a banking license. NBFCs in India exist primarily to grant credit to small businesses.

NBFCs help MSMEs meet their fund requirements by offering them loans.

Features of NBFCs you should know:

NBFCs can offer banking services such as loans and credit facilities, currency exchange, money markets, underwriting and merger activities.

Unlike banks, NBFCs cannot carry out money transfers and they do not accept demand drafts and cheques.

NBFCs are not subject to the banking regulations and oversight by federal and state authorities that traditional banks are tied to.

Examples of NBFCs in India include Investment banks, mortgage lenders, money market funds, insurance companies, hedge funds, private equity funds, and P2P lenders.

What are the Benefits of NBFCS in India for small businesses?

Earlier, small businesses looked to banks to get loans. However, NBFCs are stepping up their presence in the lending department. MSMEs have turned away from taking loans from banks because of:

  • Tight and stringent regulatory norms
  • Humongous paperwork
  • Need for collateral to secure loans.

The benefits that come with applying for loans through NBFCs are:

  • NBFCS can provide loans and credit facilities and can trade in money market instruments.
  • Recently, Finance Minister Nirmala Seetharaman stated that NBFCs can use Aadhar based KYC to avoid repeating the KYC process for customers. This increases customer convenience as they will not have to undergo the KYC process when applying for loans with NBFCS (if they have already got their KYC done at a bank)
  • NBFCs are faster than banks with regard to approving loan applications for borrowers.
  • The Financial institutions customise their products according to the needs of the business applying for a loan.
  • NBFCs are less stringent to eligibility, requirement, and paperwork.

How to choose an NBFC for your business?

Online application: Ensure that any NBFC you wish to apply for loans from has an online application form. Avoid queues and lengthy processing time by applying with online NBFCs.

Affordable interest rates: Check the interest rates being charged by NBFCs. NBFCs often customize interest rate according to requirements of borrowers. Some NBFCs even charge a much higher rate of interest for borrowers who do not meet the loan eligibility criteria. Some NBFCs are open to lower scores but charge higher interest rates.

Minimal documentation: Loan applications can be a long-drawn-out process, especially when you apply for a secured business loan from a bank. Check the online

Collateral free loans: No assets need to be pledged when applying for these loans, lifting a huge burden off small businesses shoulders.

Top 3 NBFCs in India for small business loans:

Bajaj Finserv:

Bajaj Finserv is a financial services company that helps small businesses meet their financial requirements in a timely, easy way with their MSME Business loan.

The NBFC provides collateral-free loans and loan amounts up to 30 lakhs for businesses that are looking to expand.

Along with an attractive interest rate, the loan offers a unique Flexi loan facility and approval in just 24 hours.

Tenor: Ranges between 12 months – 60 months, depending on the businesses budget.


ZipLoan is an RBI registered NBFC that offers unsecured business loans of up to Rs. 1-5 lakh. The NBFC requires a minimal list of documents and disburse the business loan within a few working days.

Your small business can apply for an unsecured business loan online on their website or through their app. Ziploan will process your loan in a few hours.

Tenor: Collateral free loans can be repaid over a period of 12-24 months in easy monthly instalments.

The Different Types of Business Loans Without Collateral Offered by ZipLoan:

Machinery Loan: For businesses to expand operations or to upgrade to a better version.

Working Capital Loan: Unsecured working capital loan for small businesses which have high seasonality and rely on working capital loans to cover wages, accounts payable, and other related finances.

Term Loan: ZipLoan also offers a term loan of up to INR 1-5 Lacs at very easy terms and conditions. The business can apply for a business loan online.

Flexi Business Loan: This loan is for unexpected cash requirements. The business owners can use the cash to meet their unexpected cash requirements.


Lendingkart is a non-deposit taking NBFC that provides working capital loans for small businesses in India.

The company offers loans at a fair interest rate for new as well as existing businesses.

Lendingkart’s loan application process can be completed online in just 15 minutes.

Lendingkart customizes your cost structure around the profit margins of your business and helps you get funds quickly. The NBFC offers business loans from INR 50,000 up to INR 2 Crore to eligible SMEs.

If you are looking for quick, easy working capital loans, fret not, you are already here. Instamojo offers quick byte-sized loans for small businesses with mojocapital. With mojoCaptial, you can avail for our faster payouts feature and manage your cash flow better!



  1. I completely agree that NBFCs in India are becoming the most preferred lender for Small business loans. When it comes to small business loans in India, you have so many options to choose from. There are a few NBFC’s like Lendingkart that provide Easy Unsecured Business Loans. You need to do your research before you apply for a business loan.

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