Unsecured Debt Funding
Youngsters and entrepreneurs of small businesses in India are known for their determination and innovative spirit. They possess a wide range of ideas and even have well-developed plans for their business ventures. However, a common hurdle that many businesses in India face is the lack of funding to kickstart their projects.
Getting project funding seems quite a convenient option, but what if there is no collateral? In this case, businesses can obtain unsecured debt funding. There are several aspects to this kind of loan that matter in sanctioning a fund with no collateral.
Defination
Before putting forth a proposal, it is extremely essential to have a thorough understanding of unsecured debt funding.
Unsecured debt funding is a loan provided to business owners without collateral. It is convenient for business expansion, reconstruction, or new ventures. Requirements must be met even without collateral.
Unsecured Debt Funding Process
In order to get this, there are certain parameters that will decide whether you are an eligible borrower for the same or not. The processing of unsecured debt funding takes place as follows:
1. Understanding Client's Requirement:
The first and foremost thing in the processing of the debt is understanding and comprehending what the client requires. As per the requirements, the financial institution figures out the details. The requirements such as financial strengths and weaknesses, future needs of the enterprise, and others.
2. Funding Proposal and Documentation:
Once the proposal and the client’s requirements are comprehended, the documentation process will start. The borrower makes a plan and chooses a suitable option before documentation begins. Sanctioning the loan requires different kinds of documents.
When this is complete, execution of the proposal shall begin and the loan will be sanctioned. As per the constitution of the business, (Sole proprietor or partnership firm, private limited company, or limited company), documents are prepared and submitted to the financial institutions.
Since there is no collateral, the sanctioning of unsecured debt funding depends on the borrower’s credit score ratings, Business model, expected demand, etc such factors. There are other kinds of requirements as well. That will change and vary depending on the financial institutions, that have approached.
Repayment of the Unsecured Loan
Once the financial institution has disbursed, the borrower to liable to repay the interest. The interval of the repayment may vary from the financial institution to institution. Most financial institutions prefer to get repaid on a monthly basis. Few may offer a fortnightly basis, and few may offer a weekly or daily basis as well. The terms and conditions are very well explained in the sanction letter. So the borrower will always have the right to choose the right and most suitable options for him.
How to Get Unsecured Funding?
There are various financial institutions that grant unsecured debt funding. The debt market involves government banks and corporate banks, mainly. But still, there are other private unsecured business loan lenders in India who are lending a hand to enthusiastic and aspiring entrepreneurs. Also, it is essential that the private institution providing funding is trustworthy and maintains transparency of the process with the borrower. It is recommended that all the options and aspects are considered when choosing among unsecured debt funding.
To summarize
Terkar Capital understands the challenges faced by young entrepreneurs and small businesses in India when it comes to securing funding for their projects. That’s why we offer unsecured debt, a convenient option for those without collateral. With unsecured debt funding, business owners can obtain loans for expansion, reconstruction, starting new ventures, or handling short-term contingencies. While collateral is not required, there are still certain requirements that need to be fulfilled. Repayment terms vary, with most institutions preferring monthly payments.
