Budding startups and businesses especially small and medium enterprises often look for a relying financial option in terms of unsecured business loans. It offers them leisure to quick approval, easy documentation, and flexible tenure. Moreover, its low and easy interest rates appeal to business owners to rely on it. If you are also one of those aspiring business owners who have started up a business and don’t have enough funds to support your business. Though you have the option to open since you are beginning a business, you might not think it fit to risk your property just for a loan or if you don’t own a property. In such conditions availing of unsecured business, financeis useful. These loans are preferred for expanding the existing business as well. So in simple terms, this loan is offered without taking any of your property as collateral.
Types of unsecured business loan
- Term loan:- You will have to return the loan you take for a specific time period, it may be secured or unsecured.
- Overdraft:- This is a credit limit or loan offered by a lender that a borrower can make use of in installments. The business loan interest rates are applied to the amount that has been borrowed or collected from the sanctioned or allotted credit limit.
- Working capital loan:- These loans can be used to cover everyday business expenses and approved based on your credit history.
Loan eligibility criteria
To avail of the unsecured business loan, you must be at least 18 years of age and the loan maturity must be at least 65 years old. You must also maintain a credit score of 750 or higher and must have one year of profitable operations in the existing company to avail an unsecured business loan. Apart from this, you must also have a steady source of income and you will be asked to provide at least 6 months’ bank statement as evidence with payslips.
Unsecured business loan interest rates
Unsecured business loan interest rates start at 14.99% per year and can go up as well. Also, these business loan interest rates might vary from financial institution to a financial institution, depending on the company’s needs and the profile of the applicant. The interest rates are also determined by various factors which also include the applicant’s financial history, credit score, and others as well.
Documents required to avail of the loan
To avail unsecured business loan, you need to submit all these necessary documents:-
- Financial institution statement, address proof, photocopies, signature proof
- Qualification certificate
- Business documents
- Partnership deep
- Form 3CB and form 3CD
These might also vary from financial institution to financial institution and as per your financial obligation.
5 Simple steps to avail of an unsecured Business loan quickly
If you are a budding entrepreneur who is scratching his head for the working capital of his new start-up business, then there is incredibly useful information stated in 5 simple steps. Simply follow them:
Step #1 Find a suitable lender who has a good reputation in the marketplace. Check whether the interest rate and other factors are in your favor or not.
Step #2 Go to the lander’s website first, and then check the eligibility criteria for getting an unsecured business loan.
Step #3 Calculate your credit score on the lander’s website. Most financial intuitions offer a FREE online calculator to check your credit score.
Step #4 Collect all your necessary documents and upload them on the lander’s website. This completion is required by most of the landers.
Step #5 Submit all your business details and information accurately. So that there would be no reason to delay in processing your application.
Pros and cons of unsecured Business loan
- You don’t need to provide collateral
- Easier to borrow small amounts
Cons of Unsecured loans
- Some financial institutions offer high-interest rates
- Shorter repayment term
- You can’t expect a huge amount
- Personal liability
An unsecured business loan is an excellent option if you are looking for a loan without security. The application is quite faster and comes with very less complications than other loans. Also, these business loan interest rates are very minimal and you can get this loan in a short time period. There is also no risk or security involved in this and also offered based on credit history.
If you are a wholesaler, manufacturer, B2B service provider, or trader, then you should get quick financial access for your business requirements, in terms of availing of unsecured financing options. Don’t get bothered about the EMIs, and other elements.
There are many leading financial institutions that offer competitive industry rates for unsecured business loans. It ranges from Rs. 5 lakhs to 25 lakhs. The other advantages include flexible repayment tenure, minimal documentation, and trouble -free disbursal. So what are you waiting for? Go and get your first easy financial option approved today.