Types of Unsecured Business Loans in India

business loan

Unsecured business loans are loans under Rs. 50 lakhs that help businesses expand their operations by purchasing any equipment or capital necessary. They may refer to SME or term loans under Rs. 50 lakhs.

Business loans are very popular today, giving businesses the necessary funds to either start or expand processes. Due to the varied requirements depending on a company’s size, there are also different loan options. Your Businesses can choose the loan most appropriate to their needs while noting whether they can offer collateral or not. 

In the latter scenario, the loan comes under unsecured business loans. The Businesses can opt for this loan if their loan amount is below Rs. 50 lakhs. Any collateral-free business loan is an unsecured loan in India, whether SME or term loan. 

That said, this phenomenon is usually associated with SME (small-medium enterprises) loans. At that scale, SMEs usually cannot afford collateral at their scale while also needing less funding to improve business processes and efficiency. As long as they are eligible, they can get a collateral-free business loan easily.

Eligibility Criteria for Unsecured Business Loans:

While collateral-free loans are very attractive, borrowers can only get them if they are eligible. Today, borrowers can check their eligibility online and determine the loan amount they can get without security. For better financial planning, they can also calculate their business loan interest rate online alongside their eligibility to understand their EMIs. 

The eligibility criteria for a collateral-free business loan include:

  • Self-employed, a partnership firm, private limited company or proprietor
  • Being in business for three or more years, with at least 5 years of business experience
  • Being over 22 years old but less than 65 when the loan matures
  • Experiencing a turnover of at least Rs. 10 lakhs
  • Making profits for the last two years
  • Enterprises with a minimum income of Rs. 2 lakhs per year

If you want a loan greater than Rs. 50 lakhs, you will need to meet different eligibility criteria, which includes asset valuation, too. However, if you want a collateral-free loan and meet the criteria mentioned above, you can get an instant approval for your business loan. 

Why Choose Collateral-Free Business Loans

One of the primary benefits of collateral-free loans is not having to provide any security. The lender gives the loan on faith that the borrower will not default based on past credit performance. Additionally, the loan amount is not insignificant – a lot can happen if Rs. 50 lakhs is properly allocated to different business areas. There are also some other benefits. 

  • Easy Application Process

Applying for a loan today is very easy with online methods like websites and apps. Lenders usually have a walk-through on their website, too, to guide you along the way. Here are the general steps you can follow when applying for a business loan online:

  1. Check your eligibility
  2. Calculate EMI 
  3. Fill the form
  4. Provide all the necessary details
  5. “Submit”

A representative usually contacts you after you apply to clarify any further requirements or documents you may have. Once approved, the loan is disbursed into your company’s account for you to spend as you desire. 

  • Instant Approvals

In today’s internet age, most lenders are online, allowing businesses of all sizes to avail of unsecured loans without visiting a physical branch. With the right documentation, they can get a loan approved almost instantly within minimal hindrance. This easy process makes collateral-free online business loans a highly attractive option. 

  • Pre-Approved Offers

One major benefit that comes with unsecured loans is pre-approved offers. These include getting a top-up loan over your existing business or even reducing your business loan interest rate. As long as you have a good credit and repayment history, your lender may let you have such additional benefits. These enhance your loan experience by ensuring you continue feeling financially secure and can successfully implement business decisions. 

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  • Online Calculators

Lenders allow borrowers to calculate EMI, interest, loan amount, eligibility etc., on the website. They offer close approximations with free calculators, so businesses understand the weight of the loan. Once they understand this, they can make financial decisions accordingly, allocating resources as necessary.

Understanding and utilising all the tools at your disposal is essential before you opt for a Unsecured Business Loan. Ensuring you meet the eligibility criteria and knowing your potential EMIs improve your loan experience. Reputed lenders offer loans at competitive interest rates with flexible repayment tenures. However, you need to truly comprehend collateral-free business loans to appreciate which lenders deserve your attention.

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