NBFC Business Loan Explained: Meaning, Types, Charges & Benefits

Running a business often means dealing with urgent financial needs. But traditional bank loans can be slow, paperwork-heavy, and difficult to qualify for. For many businesses, this gap between need and access to funds becomes a real growth barrier. NBFC business loans solve this problem by offering quicker approvals, simpler processes, and flexible funding options.

In this blog, we explain how NBFC loans work and why they have become a preferred choice for Indian MSME owners today.

What is an NBFC?

NBFC stands for Non-Banking Financial Company. These are financial institutions registered with the Reserve Bank of India (RBI) that provide loans, credit, and other financial services, but they are not banks.

NBFCs cannot accept savings or current account deposits like banks, but they can lend money to individuals and businesses. Over the years, NBFCs have become a strong support system for Indian entrepreneurs, shop owners, manufacturers, service providers, and startups.

For example, if a small retailer doesn’t qualify for a bank loan due to strict rules, an NBFC may still approve the loan after evaluating business performance.

How Does an NBFC Business Loan Work?

The working of an NBFC loan is simple and business friendly. First, the business owner applies for a loan online directly or through a partner platform like TallyCapital. The NBFC checks basic details like business turnover, income flow, credit history, and repayment capacity.

Unlike banks, NBFCs focus more on your business potential rather than just paperwork. Once approved, the loan amount is directly credited to your bank account quickly or sometimes within 24–72 hours. Repayment is done through monthly EMIs over a fixed tenure.

Types of NBFCs in India

NBFCs are classified based on their activities. Understanding these types helps you know what kind of lender you’re dealing with.

Asset Finance Companies (AFCs)

Provide loans against physical assets like vehicles, machinery, or equipment. Its interest rates are often lower than unsecured loans.

Investment Companies (ICs)

Primarily deal with shares and securities, mutual fund investments, Bonds and debentures

Loan Companies (LCs)

These are the most common and most relevant NBFCs for MSMEs. They focus on personal loans, business loans, and working capital finance.

Microfinance Institutions (MFIs)

Offer small-ticket loans to micro and small businesses, especially in rural and semi-urban areas. MFIs focus more on financial inclusion than large business expansion

Infrastructure Finance Companies (IFCs)

Finance large infrastructure projects, corporations and Government-backed projects such as -Roads and highways, Power plants, Ports and airports, Telecom and energy.

Key Features of NBFC Business Loans

NBFC business loans are popular because of the following features:

• Quick loan approval & disbursal
• Offers minimal documentation
• Flexible eligibility criteria
• Customized repayment options
• Suitable for low or thin credit profiles

Hidden Charges in NBFC Business Loans

However, these benefits often come with additional costs, which brings us to the most important part of this blog.

Processing Fees: NBFCs deduct 1%–3% of the loan amount upfront, so you receive less money than approved.

Documentation / Legal Charges: Extra fees may be charged for agreements, legal verification, and stamp duty without clear upfront disclosure.

Insurance Charges: Loan insurance is often added automatically even though it is optional, increasing your loan cost.

Foreclosure / Prepayment Charges: Closing the loan early can attract 2%–5% charges on the outstanding amount.

Late Payment Penalties: Missing an EMI can lead to daily penalties, extra fees, and a drop in your credit score.

EMI Bounce Charges: Each failed EMI due to low balance can cost ₹500–₹1,500 plus GST.

GST on Charges: An additional 18% GST applies on fees and penalties, quietly increasing the total repayment amount.

Documents Required for an NBFC Business Loan

One reason NBFCs are popular is their simple documentation process.

Commonly Required Documents:

• PAN Card (individual & business)
• Aadhaar Card
• Business registration proof
• Last 6–12 months bank statements
• Income proof (ITR / GST returns)
• Address proof

Requirements may vary based on loan amount and NBFC.

How TallyCapital Plays a Role Here

This is where TallyCapital makes the process smoother for business owners. TallyCapital acts as a smart bridge between businesses and trusted NBFC lenders like Flexiloans, GetVantage, Indifi, etc.

By using business data and financial insights, TallyCapital helps identify the right loan options for each business. Instead of visiting multiple lenders, business owners can explore suitable NBFC loan offers in one place.

TallyCapital focuses on transparency, speed, and clarity. From checking eligibility to understanding loan terms, it ensures that businesses take informed decisions without confusion or hidden surprises.

Conclusion

NBFC business loans have changed the way Indian businesses access finance. They offer flexibility, faster approvals, and better understanding of real business needs.

If you are a business owner looking for growth capital, working capital, or emergency funds, NBFC loans can be a smart option. With platforms like TallyCapital supporting the journey, getting the right business loan becomes easier, faster, and more reliable.

The key is to choose wisely, understand the terms clearly, and partner with a platform that puts your business first.