Finance your business through unsecured business loans lenders in India

unsecured business loans

To run a business smoothly, everyone needs a massive capital amount. Alongside, several factors like machinery, raw material, inventory, etc., require a handsome amount of money, which you can arrange through significant Business financing.

To get loans for your business, you need to arrange collateral in the form of security, which perhaps creates several problems. At times, a businessman is not able to organise collateral as security. So, there is a facility of unsecured loans offered by financial institutes, banks, NBFC’s, etc., to solve your capital problem.

Unsecured Business finance:

Unsecured loans mean getting credit without giving any collateral. In simple terms, it means when a lender gives you a certain amount of loan at a fixed rate of interest without pledging any security as collateral. These loans are very beneficial for any business that cannot pledge collateral as security.

Advantages of unsecured business loans:

  • Easy Application Process.
  • No collateral is required.
  • No guarantee is required.
  • Support to boost cash flow in the business.
  • Easy repayment options are available.
  • Help to improve credit ratings.
  • The loan amount can vary between Rs. 10,000 to Rs. 1 Cr.

Eligibility criteria for Business Finance through unsecured business loan lenders in India:

  • The credit rating/ CIBIL score should be above 700.
  • The minimum age should be 18 years and a maximum of 65 years.
  • The business should exist for a minimum of 1 year with a good number of profits.
  • A bank statement for the last 6 months is also required.

Unsecured loan and Secured loan- A short comparison:

Categories Unsecured loans Secured loans
Collateral NA Required
Interest rate Generally higher (15% to 35%) Generally lower (6% to 14%)
Repayment Within 5-7 years Long durations
CIBIL Score Require a good amount of CIBIL score generally above 700 A decent CIBIL score can work.
 

Pre- Payment options

Flexible Rigid

Types of Unsecured loans:

Term Loan: These types of loans are generally for a specific period of time and repaid in fixed EMI’s.

  • Working Capital loans:

These loans are provided for working capital or, in simple terms, we can say for day-to-day expenses of the business. Working capital loans are generally provided on the basis of credibility and repaying capacity.

  • Overdraft:

The bank usually gives the overdraft limit in which you have your business account. They offer these constraints as per your transaction records and payment schedules.

  • Business credit cards:

Generally, the financial institution gives business credit cards for business financing with an eminent credit limit; so that you can use them anytime when you are in urgency of money.

So, the above points are some of the unsecured business loan types by Indian lenders, which will help your business to get finance effortlessly.

Government initiatives to provide collateral-free loans for business financing

MUDRA loan: Micro Units Development and Refinance Agency (MUDRA) is the program launched under Pradhan Mantri Mundra Yojana (PMMY), which enables to supply capital up to 10 Lacs.

The program diverges into three types as follows:

Categories Loan amount
Shishu loans Loan upto 50k
Kishore loans Loan upto 50k -5L
Tarun Loans Loans upto 5L- 10L

The interest rate on the above types of loans can vary from 7-8% p.a., depending upon the applicant’s profile. However, under Mudra loans, one can issue credit cards. They can utilise the credits when they are in urgent need of money.

Must read: All you need to know about small business lending

Venture Capital Assistance Scheme:

This scheme is launched under the Ministry of Agriculture and Farmers Welfare, which offers interest-free loans to Small farmer’s Agri-business Consortium (SFAC). The government has designed this plan to fulfil the need for capital in the farming sector. It provides financial assistance to bankable Detailed Project Reports (DPRs) through the Project Development Facility (PDF).

Financial institutes like banks, NABARD, and other state financial corporations are eligible under this scheme to provide loans. Any individual and farmers, Partnership firms, SHG’s, companies can apply application and avail of unsecured business loans through this program and expand your business.

Credit linked Capital Subsidy Scheme (CLCSS):

The Ministry of MSMEs has launched this business program to empower the technology up-gradation in rural and semi-urban areas. The businesses can avail nearly 15% value of the subsidiary and a maximum of 1 Cr., which proved benefited small-scale industries. Therefore, they can obtain themselves of new technology and achieve good growth.

Conclusion:

Here are some classifications of business financing provided by Indian lenders to business owners, especially women, to help them get money by fulfilling basic eligibility criteria. Through the business loan, you can fulfil your generic business requirements and focus on the growth of the venture.

So, browse about easy business loans on the internet and effortlessly avail yourself of business credits in smooth terms. Also, you can browse online beforehand to grab a transparent idea of various business loans in India.

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