Many times, promoter funding is not enough for SMEs to scale the business. In such an instance, it is imperative for the SME to turn to external financing to boost their business prospects. However, banks often view SME lending to be risky due to the limited turnover and small tenure of operations. Thus, they often stipulate unfavorable conditions like a high collateral cover. Owing to the small ticket size of SME finance, unsecured loans to SMEs are perceived as being low-profit avenues by banks. Since SMEs have a limited asset base, the high collateral security requirement is difficult for them to comply with. The entire loan sanction process in traditional banking channels is time-consuming as it involves extensive verification by the banks and valuation of the assets provided as security by a valuer.
In such a scenario, the timely, zero collateral unsecured business loansoffered by fintech lenders are highly … Read More