Gone are the days when banks used to take months to sanction and disburse loan to SMEs; if your documents are in place NBFC/bank can do the due-diligence on your business using various technology innovations (cloud computing, digital interfaces and mobile applications). The innovation in technology has simplified the overall process of fund raising and has eased access of credit to MSMEs. Usage of technology has reduced sanction and disbursement time drastically.
Many NBFCs/banks are providing seamless in-principle loan approval to their customers using technology. The technology platform does automation and digitization of various processes of Business Loan (Term Loan/ Working Capital Loan) in such a way that a borrower gets an in-principle approval (eligibility) letter in few hours. The In-Principle approval is given based on the data provided by the borrower. After receiving the In-Principle approval, the lender will conduct a thorough due diligence and will take a call on whether to sanction/disburse the proposal. The final decision will be at the lender’s discretion. The amount mentioned in the In-Principle Letter is computed based on the data submitted by the borrower. If there is deviation or discrepancies discovered during the due diligence proceedings, the amount is subject to reduction.
PSU banks have launched a great initiative 59minutesloans portal. If all the requisite documents are available in digital format the portal gives in-principle approval in 59 minutes through a partner bank. However, the actual sanction and the disbursement of the loan is driven by the processes followed by the partner bank which can go into many weeks. The new age customer focussed NBFCs fair very well in this aspect where the detailed due-diligence and the disbursement process is driven by the technology and these NBFs can disburse the loan in few days.
SME borrower should be GST, Income Tax compliant and must have six months Bank Statement. To ensure fast, easy and hassle-free loan evaluation process, NBFC needs certain details related to your personal and business to ensure authenticity and to check eligibility for credit. An existing business wishing to make an application requires the following for automated approval process:
- GST Details: GST Identification Number (GSTIN), GST User Name and OTP
- PAN Details of business and promoters; The details are required to check the Bureau Score of all the Directors/Partners/Proprietor, to check the credit history of the organization as well as its managers.
- Income Tax Details (ITR in XML format)
- Bank Statement: Bank Statements for last 6 months in PDF format (All bank accounts having major business activities). The bank statements should be downloaded from bank’s facility or received from the bank every month. Many banks / NBFCs do accept the scanned copy of the statement. OCR (Optical Character Recognition) technology is used to read the scanned statement to reduce the data capture and analysis time.
- Details of Directors/Partners/Proprietor
- Details related to Loan requirement
- Past Income/ Revenue of the business
- Repayment Capacity
- Existing Credit Facilities
- Projected Income / Revenue of the business
- Online Access and Analyse multiple Credit Bureau data based on your consent
- Access GST returns data; either directly or through the processing of your returns from the file you have submitted
- PAN and business data verification by online integration with NSDL
- Banks statement data processing and cash flow analysis to identify any discrepancies in bank accounts
- Cross refencing above data (Bank, Bureau, GST) to get the accurate state of the business
- Business viability calculation using the projected revenue and cost method.
Personal discussion and collateral details are captured on the mobile applications along with GPS location tracking. These details are then transferred online to central processing unit. Customer Interactions and queries are automated using the mobile app; where the documents are captured and send to central processing unit electronically. Digitalization of these processes reduces the turnaround time and improves customer experience.
Once the proposal is sanctioned money can be credited to your bank account electronically.