Business loans can help you expand your business without worrying about the funds. But what do you do when you don’t have any assets or collateral to pledge?
Unsecured business loans can be taken without pledging any assets or collateral. Most banks and NBFCs give a small unsecured business loan in India to expand your business without any worry.
The interest rates of unsecured business loans might be a little higher as compared to those of secured loans. But they are good for arranging working capital, buying machinery, or any other purpose for small businesses.
If you want a fast unsecured business loan in India, you should know of the various types of loans available. Here are some of them -
Government Financing Schemes for Small Businesses
To support small businesses and entrepreneurs, the government of India has launched various schemes. These include credit subsidy schemes as well as loan schemes fir the MSME sector.
These loans need a lot of documentation and time but you can get higher amounts at lower or subsidized interest rates, that too without any collateral.
Overdraft Facilities
The Overdraft facility is provided by banks to Current Account holders. You can withdraw a sum of money that you don’t have in your account and then you can pay interest on the amount you end up utilizing.
Loans on Business Credit Cards
You can get preapproved loans if you own a business credit card, based on your transactions and payments.
You can get the amount in your bank account without having to go through complicated loan procedures.
Term Business Loans
Term loans are also known as installment loans. They are given to businesses on a monthly, quarterly, half-yearly, or yearly basis.
Businesses can use these loans to purchase assets, as working capital, or to expand their business.
The period of loan and interest rate are decided based on the loan product selected.
Consumer Loans
MSMEs or small businesses can make use of facilities like Buy Now Pay Later to purchase equipment for their business.
Unsecured business loan eligibility criteria vary between banks and NBFCs hugely. But in general terms, to be eligible for an unsecured business loan, you need to meet the following eligibility criteria -
Your age must be between 18 and 65
Your business must be operational for at least 3 to 5 years
The papers of the business must be in order like the bank statements, ITR, tax documents, etc.
Your credit score must be 685 or above
Apart from meeting these eligibility criteria, the following documents are necessary to apply for any business loan -
Proof of business proprietorship
Identity proof of proprietor
Trade license
Address proof of the business
PAN of the proprietor and/or business
The process of an unsecured business loan application is no different from any other loan. The actual procedure will also vary depending on your lender.
The first and foremost step would be to get your documents in order and check with a few banks and NBFCs before deciding on a specific lender. Once you have decided, you can choose to apply online or offline.
To apply online, please follow these steps -
STEP-1: Visit the official website of the bank or NBFC from where you want to take the loan.
STEP-2: Sign in or create an account with your username and a strong password. Creating an account will help you keep track of your application status.
STEP-3: Locate the list of products and click on ‘Business Loans’. Read the terms and conditions and click on ‘Apply Now’.
STEP-4: Proceed to fill out the application form and upload scanned copies of the required documents.
STEP-5: Finally, click on ‘Submit Application’ to complete your application. Your application will be reviewed and the status or next steps will be communicated to you within 2-3 working days.
To apply offline, please follow these steps -
STEP-1: Visit the nearest branch of the bank or NBFC from where you want to take the loan.
STEP-2: Ask for a form and fill it out. Attach photocopies of the required documents and submit them to the branch.
STEP-3: Your application will be reviewed and the status or next steps will be communicated to you within 2-3 working days.
An unsecured business loan is a great way to get funds for small businesses. They can use it for working capital or to buy assets to expand their business. You don’t have to pledge any assets or arrange a guarantor to take an unsecured business loan in India.
You can apply for fast unsecured business loans both online or offline. The process is easy and hassle-free and can be completed in 2-3 working days. If you are searching for an ‘unsecured business loan NBFC’ many NBFCs also offer such loans.
In case you are in urgent need of funds, you can also opt for instant personal loans from moneyview. Here, you can get loans up to Rs.10 Lakh with minimal documentation. To know more you can visit our website or download the moneyview app.
Anyone who has a good credit score and meets the eligibility criteria is eligible for an unsecured loan.
How much unsecured business loan you can get depends on a lot of factors. Your credit score, credit history, age of the business, annual turnover, and debt-to-income ratio, all play a part in deciding the amount of loan you can get.
Unsecured loans are risky for the lender as there is no asset or guarantor involved.
Unsecured business loans are beneficial for the borrower as they don’t have to pledge any asset. They can get a loan solely based on their eligibility criteria.
The age limit varies slightly based on the lender you choose. Usually, you need to be in the age range of 21 to 65. Your age should not exceed 65 by the end of the tenure.
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