Last Updated on May 20, 2021 by MoneyVisual
In the last decade, we have seen that many businesses have switched from offline modes to online ones. Businesses have been thriving on e-commerce platforms exponentially. We can say that e-commerce is the future of many businesses and startups.
Big names like Myntra, Amazon, Flipkart, etc. have occupied a strong foothold in the eCommerce market. There are various sellers which have partnered with such eCommerce platforms to expand their business. To aid such businesses financially, there are many fintech companies that are assisting in securing short-term loans and unsecured business loans.
Further, to survive in this financial time some companies are also giving Flipkart seller loans and Amazon seller loans. Since finances are key to any thriving business let’s check how one can get short-term loans without any security for selling on eCommerce websites.
What is a Short-Term Unsecured Business Loan for Ecommerce Websites?
A short-term unsecured business loan is a loan that can be availed by any business which has an account with any eCommerce trusted website for more than a year. As the name states, this loan is available for a short span of time. There is no guarantee or liability required for securing such business loans.
These loans can be given immediately or after a span of 2 weeks to 4 weeks. Further, the loan amount can range from Rs 50,000 to Rs 2 Crores. Such loans have a lower rate of interest as compared to traditional business loans however, the tenure is much shorter. Although no collateral is required, lenders do require some basic information and have certain eligibility conditions to ensure the loan is sanctioned to the sellers in need.
Eligibility Conditions for a Short-Term Business Loan
The following are eligibility conditions for short term business loan:-
- The business must be running for at least one year online or offline
- The business must be registered with a government authority
- The business must have a seller account on any trusted and verified eCommerce account. Here, a trusted and verified eCommerce account means that the eCommerce company must be registered and verified by the government authorities with complete paperwork and is currently online.
- The minimum business sales must be at least Rs 2 lakhs per month or can be higher or lower depending on the lender.
For an unsecured business loan the following criteria must be met to avail such loans.
Features of Ecommerce Business Loan
The following are the features of ecommerce business loan:-
- Such loans are easiest to get
- One can get the amount required for businesses easily
- In most cases, no collateral is required for securing a business loan
- The processing of such loans is easier and faster
- The rate of interest is quite lower than other loans which are available in banks
- There is no need to have a physical shop or any physical location of the warehouse is not required
- Loan amount can vary from Rs 50,000 to Rs 2 crores
So, one can secure such loans relatively faster and easier than other conventional loans.
Documents Required to Get Ecommerce Business Loans
Lenders which give ecommerce business loans meet large volumes of short term loans without security daily. One can get such financial loans to fulfill their business goals if one takes care of the below mentioned requirements when applying for unsecured loans for a short term. The following are the requirements to get an unsecured business loan:-
- The person applying for the loan must submit their buyer’s credit score while applying for an unsecured business loan. Further, the lender must have access to the applicants’ credit score for checking the eligibility to one’s loan. A credit score is a summarization of one’s past payments which includes credit card payment, loan repayments and other repayment patterns to know about the person’s honesty and credibility. Some lenders even check utility bill payments and insurance premium payment details.
- The lender will be checking the sales and purchase history before deciding on the loan sanction amount.
- One’s financial statements are also needed to be shown to the lender
- The loan tenure must be mentioned while filling up the form
- The loan amount must also be mentioned while providing details
|KYC||Aadhaar Card, Voter ID Card, Passport, etc.|
|Personal Financial Details||PAN Card|
|Residential Proof||House papers, Rent Deed, Tax Receipt of the residence, Voter ID card, Electricity Bill and others|
|Business Details||PTax certificate, GST certificate, Trade Licence, Business PAN Card, last 6 months current account details, sale and purchase history|
How to Apply for Short-Term Loans?
To apply for short term loans, one must follow the steps mentioned below:-
- Step 1: Visit any FinTech Company or NBFC to purchase a loan.
- Step 2: Check the eligibility criteria before applying for a loan. Create an account at the website by choosing a username and password.
- Step 3: Choose ‘apply for loan’ and fill up personal details like name, phone number, and email address.
- Step 4: Enter business details like business operation years, annual turnover/monthly sales, how early one wants the loan, nature of the business, and loan amount.
- Step 5: The applicant will be sent an OTP to verify the number.
- Step 6: Once done, other details like credit score, PAN card number, and sales history will be asked.
- Step 7: Financial statements need to be uploaded.
- Step 8: Once all the documents are uploaded the applicant needs to wait for the approval.
- Step 9: After completion of approval the applicant will receive a notification stating the same.
- Step 10: Login and check the loan amount approved, EMI, and tenure for repayment of the loan.
- Step 11: Enter bank details and wait for the amount to be disbursed.
- Step 12: Once the amount is disbursed, a notification will be sent to the applicant.
This is the general process for short term loans however, it may differ from lender to lender.
What are Some of the Things to Keep in Mind While Applying for a Loan?
Some of the things to keep in mind while applying for a loan are:-
- Check if the lender is approved by RBI, if don’t take a loan as such lenders have no regulators which might land the one in trouble.
- One must check for the rate of interest before taking any loan
- Another important point is to check for monthly EMIs and other hidden charges which might not be mentioned.
- Contact the lender and ask if they charge any amount for pre-settlement of the loan
- Also check for the mode of repaying loans
In short, with a well-thought plan and essential funds, one can get ahead and grow their e-commerce business exponentially.