Unsecured Business Loans

unsecured business loan in india

Unsecured Business Loan in India

An unsecured business funding is a type of business loan. Various businesses take this loan widely in India. So, they obtain this loan to meet their short-term discrepancies. Those can arise as the businesses advance forward in their activities. Lack of machinery, worker payments, pending bills, buying new stock are just some of the short-term hassles which occur. An unsecured business loan is named after the nature of the conduct. That is no availability of collateral. Yes! the collateral security is absent. Hence, this loan is termed as an unsecured business loan, Learn more

In the Indian market, being a developing nation, small to medium to big businesses exist here. Without proper financial arrangements, small and medium businesses struggles. Thus, it can impact the overall profitability of the country’s economy. To counter this issue and exterminate the economic decline banks, lending firms, financial institutions provide an unsecured business loan. Lending the businesses without collateral causes the interest rates to go higher and the loan duration shrinks.

What is the difference between a Secured and unsecured Business Loans?

In the Indian market’s context, there are multiple businesses that need financial leverage in the form of loans to compete in the environment of this country. Lending firms are also part of the NBFC sector which accounts for a big chunk of the Indian economy. NBFCs provide various types of loans based on the requirements of the borrowing party and current financial circumstances. Here are some FAQs on unsecured loans in India

The basic types of loans in a bigger picture are of two types:

  1. Secured business loans
  2. Unsecured business loans

In secured business loans, the borrower must present the collateral security. For example, A considerably large amount of loan if required for let’s say- asset renovation, or payment of debts, and the security that a company has is property. So, the company can mortgage this property and obtain a loan against their property to fulfill their financial obligations. This was an example of a secured business loan. There are a lot of other secured business loans in India as well. The common thing among all of them is, it involves collateral security. And then only the loan is provided. Generally, in secured business loans, the tenure of the loan is more. Also, the interest rates are less. But in unsecured business loans, this is the exact opposite.

For an unsecured business loan, the collateral security is absent. Thus based on the CIBIL score and overall profile of the borrowing company, businesses get the loan. Here the interest rates are higher. Since no security, and the loan tenure is fixed, not flexible.

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Why choose an unsecured business loan in India?

An unsecured business loan helps overcome day to day operational financial needs of the company. Like asset renovation, vendor payments. Sometimes there are other financial discrepancies that arise in the economic paradigm like the introduction of an exclusive taxation system. Businesses can use an unsecured loan to address such unlikely or unexpected circumstances. Every economy faces a cyclical slowdown at some point or the other. At the ground level; small and medium businesses face issues. They struggle to keep the business going due to factors like no funds to buy more raw material.

Thus an unsecured business loan is so important. Due to the times of cyclical slowdown, collateral becomes an important factor for providing loans. However, unsecured business loan in India can be obtained without the availability of the same. It can cure short-term discrepancies to address long-term developments in the future.

It also involves business-friendly conditions. So that the borrowing party doesn’t fall into debt. The repayment is completed smoothly. Because once an unsecured business loan is obtained and the financial disruptions are addressed, the company gets back on track and generates more profit. Thus ultimately pays off the loan amount to the lending institution. The business is saved and the NBFC earned its share as well. This proves that an unsecured business loan in India is a viable option to consider.

Features of Unsecured Business Loan in India

There are a few features of unsecured business loans in India. We felt like mentioning features such as fast disbursement of funds when applied. Fast disbursement of funds is because of new hassles involving the procedure for collateral security treatment. Since it only relies on track record and application, the loan is disbursed faster than other secured business loans in India.

Interest rates are relatively high. Because of no security involvement, NBFCs and financial institutions keep the interest rates slightly higher than secured business loans. That too after the negotiations. It also depends on the various firm. Whether they want to decrease the interest rate and at the same time decrease the loan tenure as well. But, since the procedure is usually quick, and disbursement of the funds is fast, the loan is a great option for small and medium industries to flourish in the competitive Indian commercial environment.

Another feature of the Unsecured business loan in India is that it can be obtained, and the repayment can be made through EMIs. The interest rate applies on all the EMIs, be it a 3-months span or a 5-months span. Ultimately, the business that requires an unsecured business loan in India can advance further with comfort. No need for collateral and EMIs involved are the features of unsecured business loans which must be noticed.

Documents Required:

Like every other financial procedure, obtaining an unsecured business loan also involves documentation. This is extremely important. The documentation can act as a major factor in the success of obtaining this loan. The availability of documentation determines the duration of the procedure.

Here are some of the necessary documents which are essential for obtaining this loan:

  • Identity documents  –  Aadhar card, PAN card, Driving license, Voter ID, Passport, etc
  • Address proofs  – Ration card, electricity bill, lease agreement, trade license, passport, tax invoices, etc.
  • Financial documents  -  Bank statement, CIBIL, business’s bank statement, asset count, etc.

How to get an Unsecured Business Loans?

Since this is the modern time, many NBFCs and financial institutions receive applications through the online medium. It has made the unsecured business funsing procedure cost a lesser amount of time.

  • The first step is checking the eligibility criteria. If the business meets the unsecured business funding requirements and is eligible to obtain the loan.
  • Preparing the application is the next step. A well-written application with all the sufficient required details. That is including asset count, the company’s track record, etc. Why is this loan being obtained? Things like these have to mention in the application.
  • If you use an online medium, then the documents are uploaded online. Because presenting documents, softcopies or hardcopies is the third step to obtain an unsecured business loan in India and overall.
  • Get fund. You can receive funds after the former step. Thus, now you are enabled to address the financial difficulties your firm is facing.
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Eligibility criteria:

The eligibility depends on the lending firms or their usual way of conduct. Most of the time, the eligibility criteria for obtaining an unsecured business loan in India are kept similar by the financial lending institutions. A CIBIL score of over 750 is required in most cases. The ages of the applicants must be between 25–55. Again, this is not applicable to all financial institutions. Minimum turnover of the business matters a lot. It must be 40 lakh INR or 50 lakh INR depending on the lending institution.

Interest rate Benefits:

There are generally two types of interest structures. They are fixed interest rate and floating interest rate. In a fixed interest rate structure, the amount of EMI remains constantly the same. On a floating interest rate structure, the interest is calculated on the balance amount.

Which business profile is applicable for an unsecured business loans? 

The minimum annual turnover of the company must be Rs. 50 lacs. The company which falls in this category, or with more turnover is the applicable business profile for an unsecured business loan in India. The business must be based in India. So, the bank stability must be 5 months or above depending on the lending institution’s requirements.

Why Terkar Capital?

Terkar Capital is one such financial firm, that provides hassle-free unsecured business loans in India. Thus we are one of the most modernized and highly specialized unsecured business loan facilitators in India. The executives were trained to speed up the procedure and assist in compiling the documentation. The borrower has explained everything about the loan till the repayment plan, and then only the procedure commences, once the picture is clear at both ends.

Other Loans offered by Terkar Capital

For More Details Please contact our Experts

If you have any questions, please do not hesitate to ask us. Please also call us or email us before visiting to make sure that you will be served with our best services.

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