Introduction
The total lending market in India was valued at Rs. 156.9 lakh crores in March 2021, up nearly 100% from FY17 to FY21. From FY17 to FY21, the value of business loans increased by 17%. In FY21, 39% of company loans went to people aged 36 to 50, with 36.8% to those aged 50 and up.
In today’s highly competitive, fast-changing world, entrepreneurs and business owners must be flexible. They have to be responsive and reactive in equal measures. They need to shift course when required and focus on growth when they should be scaling. This is a difficult undertaking, especially when you have limited resources, cash, or capital. At that, it is difficult to grow your business due to a lack of money and resources. In this case, unsecured business loans can be beneficial. Borrowers can apply for the required amount of loan to invest in their business.
What are the Eligibility Criteria for an Unsecured Business Loan?
An unsecured business loan is a business loan that does not require any form of collateral. The lender relies on the creditworthiness and repayment capacity of the loan applicant in this situation. If the individual’s creditworthiness or income stability cannot be established, the lender may ask for personal collateral before making an unsecured business loan.
Any company or individual can take out an unsecured business loan for various purposes, including improving business inventory, expanding business operations, purchasing new machinery or equipment, boosting working capital requirements, etc.
Getting an unsecured business loan is seamless and hassle-free; the business loan eligibility criteria are easy to meet, the documents required are minimal, and the disbursal process is quick.
To avail of an unsecured business loan, the eligibility criteria are:
- Applicants need to be self-employed persons, proprietors, private limited corporations, and partnership firms working in the trading, manufacturing, or service industries.
- Applicants need to have at least five years of business experience and should be in the current business for at least three years.
- Applicants must be at least 22 years old at the time of application and under 65 years old when the loan matures.
- Businesses should have a minimum annual revenue of ten lakhs rupees, a minimum yearly income of Rs. 2 lakhs, and be profitable for the last two years.
Benefits of Unsecured Business Loan
Let us look at the primary benefits of unsecured business loans and how they might help enterprises with their financing needs to understand better why they are so popular.
1. Quicker loan approval and disbursement of funds
Unsecured business loans require very little documentation and do not require time-consuming paperwork. All business loan documents can be uploaded online, and the loan is handled quickly.
The application and approval procedures are straightforward. As a result, loans are authorized promptly and disbursed.
Unsecured business loans provide several advantages, including quick disbursement of funds, making them a useful financing alternative for businesses in times of need.
An unsecured business loan is seamless and hassle-free, and small business loans are disbursed within 24 hours.
2. Assists in overcoming short business interruptions
In today’s quickly changing world, a small business owner faces numerous problems. Unsecured business loans assure a business owner who is experiencing difficulties owing to market interruptions.
Small company loans with no collateral help stabilize the market by providing capital to entrepreneurs.
3. Flexible repayment options
The majority of unsecured business loan providers provide flexible repayment choices. For various reasons, such as irregular customer payment schedules or unpaid invoices, enterprises may find it challenging to meet the early monthly repayment due dates applicable to most secured loans.
Unsecured business loans provide some repayment flexibility, making them excellent for businesses that cannot meet the strict repayment deadlines placed on them. Borrowers can get an unsecured business loan with flexible repayment tenures ranging from 12-60 months.
4. No collateral is required
Borrowers of unsecured business loans are not required to put up any collateral as a guarantee to the lender for availing of the loan amount. Borrowers who take out unsecured loans do not risk losing their assets if they miss or fail on payments.
Applicants can avail of an unsecured business loan with no collateral, and they do not need to pledge their assets to finance their business. This is the reason why borrowers love to avail a business loan.
Conclusion
To achieve tremendous heights, all enterprises prefer working capital. For the expansion of their business, they need some excellent credit and collateral. However, companies might not have enough collateral to fund their business expansion in some cases. In such situations, they can opt for unsecured business loans.
Unsecured business loans provide business-friendly terms and conditions, allowing enterprises to take advantage of new growth prospects and also having low-interest rates.
So opt for an unsecured business loan today and grow your business!
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