Self-employed professionals and entrepreneurs often need credit to expand their businesses, manage working capital, or invest in new opportunities. While banks have been the traditional source of credit, many self-employed borrowers now prefer Non-Banking Financial Companies (NBFCs). NBFCs have steadily gained popularity because they offer flexibility, faster approvals, and customer-friendly processes. The shift is not a trend of the moment. It reflects how financial needs of independent professionals have evolved over time.
In this article, we will explore why self-employed borrowers prefer NBFCs over banks and how NBFCs such as Perfect Finserv have become reliable partners in their financial journeys.
Quick Approvals and Faster Disbursement
Self-employed borrowers often need funds urgently. Business opportunities do not wait, and working capital requirements often arise without warning. Banks follow strict procedures that involve heavy paperwork, multiple verification steps, and longer approval timelines.
NBFCs offer a different experience. They focus on quick processing. Their digital platforms allow borrowers to submit applications online with minimal documentation. Credit teams review applications faster, and disbursement often happens within a few days. Self-employed borrowers value this speed. They know that quick access to credit can help them grab new contracts, buy inventory on time, or expand their operations when the market demands.
Flexible Eligibility Criteria
Banks usually demand stable income proof such as salary slips or regular cash flow statements. Self-employed borrowers rarely have fixed monthly incomes. Their earnings fluctuate based on projects, seasonal demand, or client payments. When banks see irregular income patterns, they hesitate to approve loans.
NBFCs design eligibility criteria that suit entrepreneurs and independent professionals. They evaluate cash flows, bank statements, and business turnover instead of asking for rigid monthly income proof. This flexibility allows self-employed borrowers to qualify for loans more easily. For example, a consultant who earns high income in some months and low income in others can still get approved by an NBFC because the focus shifts from stability to overall repayment ability.
Minimal Documentation
Self-employed borrowers dislike the heavy paperwork banks demand. Banks often ask for tax returns, audited financials, property papers, and guarantors. The process becomes complicated and time-consuming.
NBFCs simplify documentation. Many of them only ask for basic KYC documents, bank statements, and proof of business activity. Digital NBFCs like Perfect Finserv use advanced technology to verify details quickly. Borrowers upload documents online, and the system processes them instantly. This convenience makes NBFCs more attractive to those who want simple, hassle-free access to credit.
Customized Loan Products
Banks offer standard loan products. Their personal loans or business loans have strict conditions, fixed interest rates, and limited repayment options. They rarely customize loans based on individual needs.
NBFCs offer personalized loan solutions. They study the unique requirements of self-employed borrowers and then suggest products that fit. For example, some NBFCs allow flexible repayment schedules that match seasonal income patterns. Others provide overdraft facilities that help manage cash flow. Perfect Finserv, for instance, creates loan packages that suit professionals, traders, and small business owners differently. This customization builds trust and long-term relationships.
Lenient Credit History Requirements
Many self-employed individuals start their businesses with limited financial backing. They often lack long credit histories, and some may have faced financial struggles in the past. Banks rely heavily on credit scores to make lending decisions. A lower credit score often leads to rejection, even if the borrower currently runs a profitable business.
NBFCs adopt a broader approach. They consider business performance, recent income trends, and future growth potential. They do not rely solely on credit scores. A self-employed borrower with a promising business model but an average credit score still gets a fair chance with an NBFC. This approach makes credit accessible to many who would otherwise face rejection from banks.
Higher Loan Approval Rates
Self-employed borrowers often complain about repeated rejections from banks. Every rejection not only delays their business plans but also impacts their credit profile. Banks reject applications because of rigid rules, conservative risk policies, or lack of standard income documents.
NBFCs maintain higher approval rates. They treat borrowers as individuals instead of applying one-size-fits-all policies. By considering business-specific factors, they approve more applications. Self-employed borrowers recognize this difference and prefer NBFCs because they know their chances of getting approved are higher.
Competitive Interest Rates
Banks enjoy cheaper sources of funds, but they sometimes charge higher interest rates to self-employed borrowers due to perceived risks. NBFCs face higher borrowing costs, but they offset this by tailoring interest rates to borrower profiles.
For borrowers with healthy business cash flows, NBFCs offer competitive interest rates. Many NBFCs also provide flexible repayment options that reduce financial stress. Perfect Finserv ensures that self-employed customers get rates that match their repayment capacity. This balance between affordability and flexibility makes NBFCs a better choice for many.
Customer-Centric Approach
Banks treat loan applications as transactions. Their focus often remains on policies and compliance. Self-employed borrowers feel that banks do not understand their struggles.
NBFCs adopt a customer-centric approach. They assign relationship managers, provide personalized guidance, and often maintain regular communication. Borrowers feel valued because NBFCs listen to their concerns and adjust terms where possible. This relationship-driven model builds loyalty. Self-employed individuals prefer NBFCs because they want lenders who understand their journey and challenges.
Technology-Driven Lending
NBFCs have embraced technology faster than banks. They use data analytics, artificial intelligence, and digital verification tools to make lending smoother. Self-employed borrowers upload documents online, track applications in real-time, and receive instant notifications.
Perfect Finserv, for example, combines technology with customer care. Their platforms provide instant eligibility checks, EMI calculators, and transparent repayment schedules. This digital-first approach appeals to young entrepreneurs and professionals who value efficiency.
Lower Collateral Requirements
Banks often ask for collateral before approving loans. They prefer property, fixed deposits, or other assets as security. Many self-employed borrowers, especially those who run small businesses, do not own such assets. As a result, they struggle to qualify for bank loans.
NBFCs frequently provide unsecured loans or loans with minimal collateral requirements. They assess repayment ability instead of demanding heavy security. This flexibility makes NBFCs more accessible to self-employed borrowers who want credit without risking their personal assets.
NBFCs Support Business Growth
Self-employed individuals view NBFCs as partners in growth. By offering quick access to capital, flexible terms, and personalized service, NBFCs empower them to scale operations. Borrowers can purchase equipment, expand into new markets, or hire more staff without delay.
Perfect Finserv stands out in this journey. It supports self-employed borrowers with financial products that grow with their businesses. Instead of limiting credit, Perfect Finserv builds long-term relationships that ensure entrepreneurs achieve their goals.
Conclusion
Self-employed borrowers prefer NBFCs over banks because NBFCs provide speed, flexibility, and customer-friendly services. They simplify documentation, reduce collateral requirements, and approve loans based on business potential rather than rigid rules. Banks still serve large corporates and salaried individuals, but for independent professionals and entrepreneurs, NBFCs offer better solutions.
Perfect Finserv represents the new-age NBFC model. It blends technology with personal care and delivers customized loans that fit the real needs of self-employed borrowers. As India witnesses rapid growth in entrepreneurship, NBFCs will continue to play a critical role in empowering self-employed individuals to achieve their financial dreams.
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