In India, access to formal credit has long been a challenge for many individuals, especially those without a credit history. While digital finance is expanding, a large section of the population still turns to family, friends, or community groups when they need money. Traditional banks continue to rely on past loans and credit card usage to determine loan eligibility, making it difficult for first-time borrowers to access funds. With so many people left out of the formal financial system, alternative lending is emerging as a game-changer, providing new and accessible ways to secure financial support.

Wondering what alternative lending is?

It means getting loans from sources other than banks, like digital lenders, fintech companies, or NBFCs. Instead of just checking credit scores, they use other ways to decide who can get a loan, making it easier for more people to access money.

As of March 2024, loans to self-employed individuals had risen to INR 35.7 trillion, while lending to MSMEs reached INR 28.4 trillion. Alternative lending remains a crucial force in supporting these segments.

Key aspects of how alternative lending is empowering small businesses:

• Quick and Easy Application

Unlike traditional bank loans, which often require extensive paperwork and strict eligibility criteria, alternative lenders have a much simpler approach. In many cases, all you need to do is provide access to your digital bank statements, and lenders can quickly assess your financial health. This streamlined process reduces wait times, eliminates excessive documentation, and makes it easier for individuals and businesses to secure funding without unnecessary delays.

• Quick Access to Funds

Alternative lenders not only keep things simple but also work much faster than traditional banks or credit unions. While banks can take weeks or even months to approve and disburse a loan, alternative lenders often process applications and provide funds within days. This speed makes them a great option for small businesses and individuals who need quick financial support without long waiting periods.

• Flexible Loan Criteria

Alternative lenders have more flexible criteria compared to traditional banks, making it easier for startups and businesses with low or no credit history to get financing. Many online platforms assess creditworthiness using different types of data, allowing them to approve loans for businesses that banks might reject. This broader approach helps more businesses access the funds they need to grow.

• Quick Funding Availability

Many alternative lenders can disburse funds within days or even hours after approval. This fast access to capital is essential for businesses that need immediate financial support to manage operations, seize opportunities, or handle unexpected expenses.

Conclusion: Getting a loan doesn’t have to be complicated. With a simple process, quick approvals, and flexible eligibility, more people and businesses can access the funds they need without long wait times or strict requirements. It’s a faster, easier way to get financial support when it matters most.