Small business loans are both easy and hard to get. If the business has a verifiable legal and income proof and history, it is easy to secure a business loan. Also, if all the business loan documents are in order, then it further makes the process easier. Still, many business owners find it difficult to avail a business loan. And the main reason for this is lack of security.
The banking sector is lately facing a rise in NPAs. And this has put pressure on them to lend cautiously. So they have adopted additional scrutiny methods. However, this does not do well with the MSMEs in India.
India is a growing economy, and MSMEs contribute to over 45% to Indian GDP. This makes it imperative for the MSMEs to flourish to help the Indian economy to grow in return.
Fortunately, many NBFCs and online lenders are working on helping the MSMEs meet their financial requirements by providing them with the business loan in India without security.
Let’s have a look at the benefits of availing an unsecured business loan in India.
No Collateral Required
The first and foremost benefit of availing an unsecured business loan is that there is no security required to avail a loan. The business owners who could not get access to a loan for business earlier due to no security can now avail business loans. A business loan in India without security gives the business owner access to funds to take his business to new heights without worrying about hypothecation of the asset.
In India, small business owners generally don’t wish to risk their property by hypothecating it. However, many of them don’t have security to hypothecate. So, for them, an unsecured business loan comes as the best loan option.
Attractive Interest Rates
Interest rates are the first thing that every individual considers while choosing the loan product. Interest cost is the cost of availing loan; it is the money that the borrower has to pay to the lender for taking his money (in simple words). Along with the interest cost, the lender also has to pay the other expenses, such as processing fee, prepayment charges, etc. All these costs together make the APR (Annual Percentage Rate) of the loan.
Notable, while availing a loan for business, the borrower must not only consider the interest rate but the APR as well. It will give a true picture of the cost associated with the business loan.
Flexible Repayment Tenure
The collateral-free business loan comes with flexible repayment tenure. With this, the borrower gets the option to choose the right repayment tenure that suits his pocket. For instance, a business avails a loan of Rs. 5,00,000 for a year and his EMI turns out to be Rs. 47,038 approximately. However, if he feels he cannot afford the EMI, he can choose the tenure for 24 months with an EMI of Rs. 26,186 approximately.
Under the flexible repayment tenure, the borrower can also choose the loan tenure of 18 months.
Quick Loan Application Processing
There’s no need to avail a loan for business if it is not granted on time. If the business owner does not get access to funds at the time of need, then the business loan does not serve its purpose. Keeping the same in mind, there is a need for quick loan application processing.
Unsecured business loans are processed faster within a week. All the business owner has to do is apply for a collateral-free business loan online on the NBFC or lender’s website. He needs to fill the necessary KYC and loan requirement details in the loan application form.
The lender will further process the loan application, and the borrower will get a call from the lender’s side within 24 hours to take the process further. In all, the process is fast and the borrower gets the funds credited in his account within three working days.
Easy Eligibility Criteria
The eligibility criteria for a business loan without collateral is straightforward to meet. First, there is no need to provide collateral to get access to business loan. Next, if an NBFC business loan or online business loan is availed, the requirements are very basic. The business should be at least two years into operation, and it must have an ITR of more than Rs. 2.5 lakh in the previous year. Next, the business should have an annual turnover of Rs. 10 lakhs and provide a bank statement for at least nine months. Also, the borrower must either own his house or business place or both.
If the borrower meets all these requirements, he will be granted the loan. Notably, the NBFCs have their own tool to assess the creditworthiness of the borrower. This, thus, increases the chances of getting the loan application approved.
Now that you know the benefits of applying for a collateral-free business loan in India, head over to ZipLoan website or download our App from the Google Play Store to apply for the loan. Our business loan process is pretty straightforward – just fill in personal and business details, loan requirements, and provide documents to get an instant business loan.