Is an NBFC Business Loan Financially Beneficial for Growth in 2024

June 13, 2024
Updated on

A business loan availed from a NBFC is a NBFC loan. Non-banking financial companies (NBFCs) are new generation lenders who are changing the MSME lending landscape in India. NBFCs help small business owners to get access to formal credit and secure financial help to grow and expand their businesses. 

NBFCs are institutions which do not hold banking licenses but provide bank-like services, mainly involved in providing unsecured, collateral-free business loans. For MSMEs these NBFC are a blessing in disguise, as they find it difficult to get financial help from the banks due to lack of collateral.

Challenges Faced by MSMEs in Accessing Finance

Let’s explore the specific challenges faced by MSMEs when accessing financing in India:

Requirement of Collateral for MSME Loans

Despite being economic drivers, MSMEs with limited credit history face stricter loan requirements, complex paperwork, collateral demands, and high interest rates from several financial and banking institutions. Small businesses struggle to get loans because of several critical challenges. They often don’t have assets to use as collateral. Hence, they turn to NBFC loans. These loans don’t need collateral and provide small businesses with an alternative way to get funding.

Inadequate Financial Expertise

MSME owners often lack the requisite financial know-how to navigate critical business choices. This deficiency in financial literacy hinders MSMEs from selecting optimal lenders for their needs, potentially resulting in higher interest rates and unfavourable credit scores. Additionally, poor financial decisions can trigger working capital shortfalls and cash flow problems. Grasping the intricacies of MSME loans and funding options, including online NBFC loans, is paramount, as these businesses frequently depend on external financing during challenging periods.

Lack of Liquidity

As suppliers to larger organisations, most MSMEs depend on the fortunes of those enterprises and their established payment schedules. Delays in payments or disruptions in customer operations can severely restrict cash flow and trigger liquidity crises for MSMEs. To bridge these temporary shortfalls and keep the business afloat, MSMEs seek out the fastest and most streamlined sources of funding, like NBFC instant loans. However, their focus on day-to-day operations often leaves them with limited resources for long-term investments that could fuel growth.

Limited Access to Modern Financial Regulations

In spite of government initiatives aimed at streamlining MSME funding, numerous regulatory hurdles persist within the sector. These obsolete practices act as a barrier, preventing MSMEs from accessing timely financial resources. As a consequence, the processes for acquiring business permits, securing insurance, and navigating tax assessments become extremely hard for MSMEs. Furthermore, small businesses, especially in rural areas, due to digital illiteracy, can’t use online systems to deal with these existing regulatory bottlenecks, making it even harder. All this slows down the growth of small businesses.


Accessing formal credit or MSME business loans is a task for small business owners and MSME entrepreneurs. The banks are occupied by the large enterprises which is already a big challenge for the small businesses, above it the ask for asset deposit, time that goes in getting a loan sanctioned are other factors that add to their difficulty.

Non-banking financial companies offer a simplified process and criteria for MSMEs to borrow funds.  Thefaster loan process, minimal documentation, digital process and the most important collateral free loans are some of the UPSs for MSMEs for choosing NBFCs for their financing needs.

Grow your MSME with collateral-free business loans

Financial Benefits of NBFC Business Loans for MSME Growth

These are some of the major financial benefits of NBFCs for MSME growth:

Financial Inclusion

NBFCs are upping their game by making services more accessible and user-friendly. They act as a bridge for individuals often shut out of or underserved by traditional banking. By leveraging technology, they offer intuitive solutions like web apps, mobile payments, and on-the-spot verification to streamline financial transactions. This expands access and enhances the user experience. Private sector NBFCs, therefore, play a pivotal role in driving financial inclusion, particularly in underprivileged regions and for tech-savvy applicants.

Inclusive Loan Access

NBFCs provide a smoother loan application journey for individuals with low credit scores, alternative income sources, or unconventional collateral, thereby catering to a wider pool of borrowers. As opposed to established banks, private NBFCs boast more flexible eligibility criteria and less paperwork. Their streamlined and swift approval processes ensure you get the funds you need promptly.

Cost-Effective Solutions

NBFCs can provide more attractive interest rates on business loans compared to traditional banks. This stems from their efficient operations and looser regulatory burdens. These cost advantages translate into benefits for their customers through lower interest rates on NBFC loans and deposits. NBFCs also offer flexible repayment plans and custom loan products tailored to your needs.

NBFC Loan for the Growth of Micro, Small, and Medium Enterprises

Digital lending in India is a segment that is growing exponentially with every passing year. According to Mordor Intelligence reports, the digital lending market value is projected to be $453.32 billion in 2024 and is anticipated to reach $795.34 billion by 2029. This represents a compound annual growth rate of 11.90% over the forecast period (2024 to 2029).

NBFCs and MSMEs go hand-in-hand. When the MSME sector does well, NBFCs get better at offering loans with flexible terms.

NBFC loans are beneficial to MSMEs in the following ways:

  • Small businesses can access collateral-free loans to fuel their expansion efforts. Kinara Capital, renowned as the best NBFC for business loans, provides unsecured loans under their working capital loan, machinery loans and HerVikas programme. These loans are especially beneficial for MSMEs without property to mortgage who aim to grow their businesses.
  • One of the biggest advantages of NBFC loans is their streamlined eligibility criteria. No more struggling with piles of paperwork. NBFCs leverage digital tools to make the process faster and more transparent. Platforms like Kinara Capital’s myKinara app, available on the Google Play Store, provide Business loan eligibility results in just a minute.
  • Another major draw for MSMEs seeking funding is the minimal documentation required by NBFCs. Gone are the days of compiling hefty paper trails. NBFCs prioritise a streamlined approach, allowing you to upload documents digitally through secure online platforms.
  • For any business owner considering an NBFC loan apply online, speed is a top concern. After all, who wants to wait around for critical funding? Here’s where Kinara Capital shines. Their impressive 24-hour disbursement policy means you can get the loan amount transferred directly to your account within a single business day.
  • MSMEs especially value the flexibility NBFCs offer in terms of loan tenure. Unlike traditional banks with rigid repayment structures, NBFCs often provide more options. This allows small business owners to select a loan term that aligns perfectly with their specific needs and cash flow projections. Whether you require a working capital loan to cover short-term operation requirements or a longer-term loan for equipment acquisition, NBFCs empower you to find the perfect fit.
  • An NBFC business loan is a great option as the industries opening up and increasing their production capacity will directly contribute to the growth of the MSME sector. Unsecured loans have been a major driver of growth for non-bank lenders in recent times because of the fact that they require less paperwork and no property collateral. According to India Ratings, the NBFC sector is expected to expand by a healthy 20% in the coming fiscal year (FY25).

Why choose Kinara Capital for NBFC Business loan?

Kinara Capital is an RBI registered Systemically Important NBFC in India, and aims to empower the MSME sector by providing collateral free loans. Kinara’s business loans can be availed for business development, asset purchasing etc. Working capital loans by Kinara can be utilized for buying raw material and paying workers. The HerVikas programme is designed to provide business loans to women business owners, with HerVikas women get instant discounts on their loan applications.

Kinara Capital has disbursed loans 77000+ worth over INR 6700 Crores till date. Check your loan eligibility on the myKinara app in 1 minute and avail MSME loan in 24 hours at your doorstep in vernacular. Also, we have a dedicated customer support team available between Monday – Friday (9.30 AM – 6.00 PM) at our toll free number 1800-103-2683 for any questions or assistance. This ensures that entrepreneurs can get the help they need throughout the loan process.


1. Is it OK to take a loan from NBFC?

Securing loans from an NBFC can be a good choice, especially if banks are refusing. NBFCs are often faster and less strict about paperwork than banks, making them a strong alternative for businesses needing quick cash.

2. How does an NBFC lend money?

NBFCs act like middlemen for money. They borrow money from banks and other sources, then lend it to people and businesses in need. Their primary revenue stream comes from the interest charged on these loans.

3. Why is NBFC better than banks?

Banks can be slow and picky regarding loans. NBFCs are basically like lenders who give you money quicker and with less hassle. No need for a ton of papers, and they’re more flexible about who they lend to. This means you get the cash faster and easier.

4. How long does it take to get an NBFC business loan approved?

If your paperwork is in order and you meet the eligibility criteria, the NBFC can approve your loan and provide the money within 24 hours.

5. What documents are required to apply for an NBFC business loan?

To get an unsecured NBFC business loan, submit a filled application form with two passport-sized photos and KYC documents like your Aadhaar card or passport. Additionally, bring along PAN cards for both your business and yourself. Proof of business ownership and address will be required, along with business and GST registration certificates. To demonstrate your financial health, provide at least six months of bank statements alongside audited balance sheets and profit/loss statements from the prior year, ideally prepared by a certified accountant. Finally, be prepared to submit income tax returns for the past 2-3 years.

Check your Eligibility in 1-minute!

Check your Eligibility in 1-minute!

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