How Secure it is to Get Business Loan From Online Lender?
Business loans are loans most businesses take to meet the financial requirements for various operations. Businesses take loans to meet their day-to-day expenses, purchase raw materials, and other needs. They can meet small fund requirements by taking small business loans online. It is easier to take a small business loan online as compared to a bank loan. The loan processing time of online loans is lesser than bank loans. Online lenders provide small business loans at flexible terms and conditions. It is convenient to take an online loan for business. Finding a genuine online lender is necessary to avoid any risk of fraud.
Is it Safe to Get a Business Loan From an Online Lender?
Taking a loan from a genuine lender can be a safe and secure way to fulfil the monetary needs of a business. There are many lenders online who claim to offer instant loans with minimum formalities. It is essential to understand the difference between a genuine and a fraud lender. Borrowers shall refrain from taking an online business loan if the lender offers it with unrealistic terms and conditions. These lenders can be frauds who aim to extract your personal information and misuse it.
Tips to Identify Genuine Vs. Fraud Online Lenders:
Below are a few indicators that help borrowers about the authenticity of an online lender:
- Permitted by an authority: As per RBI guidelines, the entities regulated by RBI or permitted by any other law can carry out online lending activities. You can check the bona fide of the online lenders on RBI’s website. RBI registers digital lending companies. A lender can be a fraud if RBI or any other authority does not regulate him. Borrowers should verify the reality of the online lender before applying for a loan.
- Have a physical address in India: A lender may be a fake one if he does not have a verifiable official address in India. Fraudulent lenders operate through online modes. They create and maintain an online network to coordinate with their team. They do not have an actual website. If they have a website, it is not encrypted to maintain the privacy of the user’s information.
- Ask for KYC details: Genuine online lenders ask borrowers to fill out a Know Your Customer (KYC) form. The KYC details include the borrower’s name, date of birth, contact details, PAN, Aadhaar Number, address proof, etc. The lenders use these details to verify the identity of the borrower. Fraud lenders offer to transfer the instant small business loan amount to the borrower’s bank account. They use their mobile number and bank details. They do not verify the borrower’s identity through KYC norms. Their sole purpose is to gain access to the borrower’s data. They use this data to blackmail the borrower and leak his personal information if they do not pay the amount asked of them.
- Check creditworthiness: Authentic digital lenders check the creditworthiness of the borrower. The borrowers have to go through a procedure that includes the submission of documents, income proof, etc. Legitimate online small business lenders provide financial assistance with minimum formalities. If a lender does not ask for any details and offers a loan without checking the creditworthiness of the borrower, it might be a fake one. Borrowers shall not connect with lenders who offer unrealistic deals despite having a poor credit score.
- Loan processing fee: Fake online lenders ask for the payment of a loan processing fee upfront. Whereas genuine digital lenders deduct the loan processing fee amount from the sanctions loan amount after the approval of the loan. Borrowers shall carefully examine the lender before making any payment or providing access to personal information.
- Proper loan agreement: Paperless work is acceptable in today’s digital world. But borrowers shall look out for lenders who offer funds with no formalities or paperwork. Genuine lenders maintain transparency in loan processing. Borrowers shall take an online loan from lenders who provide a loan agreement. The agreement indicates the terms and conditions, repayment schedule, penalty, etc.
Attributes of an Authentic Online Lender
- Have a secure and encrypted official website.
- Registered with RBI or other authority.
- Verified physical address.
- Positive and genuine customer reviews.
- Follow a clear and transparent procedure for loan approval and sanction.
Report Fraud Online Lenders
It is important to stay alert and report fraud. If anyone has been a victim of online fraud or comes to know about an online scam or fraud, the online lending platform shall immediately report to any of the following:
- Report to RBI’s website.
- Cybercrime police in the area.
- Report the application on google.
Conclusion
Online business loans are a suitable option to raise funds for the immediate financial needs of the business. You can avail of these loans if you choose an authentic online lender. If the borrower does not have a good credit history, the lenders offer online business loans at a high-interest rate. New businesses which do not have a credit history can take loans from startup business loans direct lenders. Any unrealistic offers can be an indication of fraud. Hence, borrowers should share personal information after verifying the legality of the lender. They should pay the fee after verifying the genuineness of the lender.
For more such articles and financial information, please visit https://www.piramalfinance.com/personal-loan