What Are Flexi Loans & How Are They Useful For Small Business?

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What are Flexi Loans How are they useful for
Small Business?
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Flexi loans are the best option for unforeseen
financing situations where a businessman requires
immediate funding for his business. These are the
new age loans that are designed to best serve the
immediate financial requirements of a
businessman. Flexi loans are a kind of
pre-approved loan limit. The businessman can
utilize the funds as and when required during the
loan tenure. A flexi loan can be used by a
businessman for debt financing and management. He
can also use the funds to finance business growth
and expansion. A flexi loan can be used to
finance equipment or machinery or to stock
inventory. In addition, a flexi loan can also be
used to pay off debts.
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Significantly, a flexi loan can be secured and
unsecured business loan. A secured flexi loan is
availed with collateral, i.e. the businessman has
to hypothecate an asset. And for an unsecured
flexi loan, there is no need to hypothecate an
asset. So, as per the need of the businessman, he
can choose between the two. There are various
financial institutions in India that provide
flexi loans at basic eligibility criteria and
low-interest rates. You can look forward to
availing a loan from them.

• Table of Contents
• What are the Features of Flexi Loans?
• What are the Benefits of Flexi Loans?
• What is the Eligibility Criteria for Flexi Loans?
• Important Points

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What are the Features of Flexi Loans?

• The three most important and beneficial features
  for businessmen are as follow
• A businessman can withdraw amount for his
  business as and when required, but only up to the
  sanctioned limit. A flexi loan is a type of
  overdraft facility where the businessman can
  withdraw the required cash for managing
  contingencies.
• The businessman has the facility to prepay the
  borrowed amount as they find it convenient.
• The other important benefit is that no matter
  what limit is sanctioned by the lender, the
  interest will only be charged on the amount
  withdrawn by the businessman. No interest will be
  charged on the remaining amount.

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What are the Benefits of Flexi Loans?

• The following are the benefits of flexi loans for
  a businessman
• Availability of Cash With this type of loan, the
  business owner has the availability of cash every
  time. The business owner has a pre-approved
  limit. In case of emergency, he can withdraw
  amount as and many times within the sanctioned
  limit and use it.
• Documentation Since flexi loans are
  pre-approved, there is minimal documentation
  required for this type of business loans. This
  not only saves the time of the businessman but
  also makes the loan availing process hassle-free
  due to minimal documentation.
• Withdraw There are no limitations on the number
  of time the funds can be withdrawn. In case the
  small business owner has withdrawn some cash and
  he requires immediate cash again, he can withdraw
  funds. However, the only condition is that the
  loan limit must not be exceeded. Thus, there is
  no need to draft a new loan application every
  time.

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Prepayment Option The business has the ease of
prepaying the loan amount. This makes the loan
availing and repayment terms easy as he can avail
cash and repay it as per the requirement and his
desire. This allows the businessman to prepay the
business loan when he has excess funds which
ultimately results in paying the principal amount
quickly. Interest Charge This type of loans
for business reduces the interest cost. While
there is the entire limit, the interest is only
levied on the amount withdrawn. This implies, if
the loan limit sanctioned is INR 5 lakhs but only
INR 2 lakhs are withdrawn. The interest will only
be charged on INR 2 lakhs. This also means that
the EMIs will be low making it easier for the
business owner to repay the loan.
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What is the Eligibility Criteria for Flexi Loans?

• The following is the eligibility criteria for
  this type of business loan
• The businessman must be between the age 25 and 60
  years.
• The annual turnover of the business must be INR
  10 lakhs or more. This signifies that the
  businessman generates enough profit to repay the
  loan timely.
• The ITR filed by the businessman for the previous
  12 months must be INR 2.5 lakhs or more. This
  represents the profit of the business.
• The bank statement of the account used for
  business transactions. This will help in
  verifying the financial behaviour of the
  businessman.
• The businessman must own either the office
  premise or his house. This point is compulsory to
  meet if the businessman is availing a
  collateral-free business loan.

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Important Points

• The flexi loan limit is usually sanctioned for a
  time period of 12 months.
• The eligibility criteria vary from one loan
  lender to another. Therefore, it is advisable to
  gather all the information regarding the
  eligibility criteria of the lender.
• Unlike a machinery loan or working capital loan
  which are availed for a specific purpose, a flexi
  loan can be used for any business-related
  activity. They are flexible in nature in terms of
  usage and payment.
• A flexi loan can also be used to consolidate all
  the loans. This will bring all different loans
  under one account. And thus, the businessman is
  not required to pay different loans and can
  easily pay off the debts conveniently.
• To avail a flexi loan, you can fill the flexi
  loan application online. Almost every lender has
  an online presence these days. The businessman
  can log on to the website of the lender and fill
  the application form.

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