How an Unsecured Business Loan is the Safest Bet for Growing Your Business?

When you are planning to raise short-term finance, an unsecured loan can be the best way to do so. The safety offered by an unsecured small business loan is one of its primary selling points. You are not required to put up equipment or property as collateral when applying for an unsecured loan. Notwithstanding the fact that most small businesses lack adequate collateral assets, the elimination of this requirement makes these small business loans more accessible for MSMEs.

Moreover, the entry of NBFCs has further democratised the Indian small business loan market. New age lenders use the power of internet, cloud computing, big data and AI to process loan applications faster and with higher disbursement ratios than their banking counterparts. For example, applying for a business loan online with Lendingkart can get you the money in as less as 72 hours while a bank takes at least 7 days to process the same application.

Here is how a small business loan helps in your company’s growth.

Ensures operational successes

Every business relies on operational stability to earn profits. A small business loan allows you to purchase raw materials, finished goods, or other items that you need to keep in ready stock. Furthermore, you can also utilise the loan funds to pay wages and salaries, and clear immediate bills and expenses.

A small business loan also helps you in working capital management when your bills receivables get delayed or there are unexpected operational costs to be taken care of.

Safeguards your bottom-line

By offering quick and easy liquidity, small business loans give businesses a way out from the vicious debt traps practiced by unorganised moneylenders. Now you can safeguard your bottom-line more easily with MSME loan funds without having to worry about long-drawn loan approval processes from banks.

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An unsecured business loan is not given against a collateral, therefore its value is not tied to the value of a fixed asset. You can get an unsecured loan starting from Rs. 1 lakh and go all the way up to Rs. 1 Crore to fit your business requirements.

Flexible Repayment

Small business loans from FinTech lenders comes with another plus i.e. the option to pay EMIs on fortnightly or monthly basis as per the loan agreements. So, not only can you get the loan funds quickly but you can also repay them faster to get another loan approved. For example, Lendingkart approves and disburses the paid-up loan amount without further processing charges or additional document requirements.

Multi-purpose usage

An unsecured business loan is a short-term business loan, thus, lenders do not impose any restrictions on its usage. You can use the loan funds for any number of business activities which makes them excellent for boosting your working capital, business investment and marketing activities.

Now, after reading the benefits, the question you must be asking is that;

What if you default on an unsecured business loan?

Well, defaulting on the loan can ruin your credit score for starters. And, you might not get loan future loan approvals due to the bad credit history. Which in turn will make the loan repayment even more difficult. The lender may also file a lawsuit if all negotiations for repayment fail.

However, in most cases the lenders will consider a revised repayment plan if you let them know of your financial difficulties in advance.

Wondering where to apply for a business loan online? Click here to visit us at Lendingkart and start your first online business loan application.

Grow Your Business with Quick Small Business Loans

Every business follows a different approach towards loans and institutional finance. As an independent business owner you may or may not have borrowed money in the past to achieve your business goals. If you have not taken a business loan in the past, it is but natural to be a little averse to taking up a liability, however, sometimes a loan is a risk worth taking.

By utilising the loan funds for the right reasons, at the right time, you can give your business a veritable boost. Here are a few reasons for taking a business loan that you should consider

Expanding your facility or getting a second site: If your business has been growing year on year, expansion is a logical step to consider. You can utilise business loan funds for restructuring and expanding the original site or expand your venture to a second or even third site.
Improving your credit ranking: Borrowing loans and timely repaying them opens the path for larger institutional finance in the future. As good repayment record will have a positive effect on your credit rating, establishing you as a bona fide borrower. This in-turn will allow larger borrowings two or three years down the line, when your business needs another round of funding.
Buying specialised tools and equipment: If you already have ample space at the existing site, then you can also consider using the funds from your business loan for purchasing new stock or equipment. Sometimes using latest technology for production and management of your business can result in huge cost savings.
Taking advantage of a golden opportunity: Well a good opportunity seldom knocks twice, so if an amazing idea or opportunity comes your way which requires fast funds, a business loan can help you capitalise on it.
Hiring and talent acquisition: Every successful business needs talented hands and business owners agree unanimously on the fact that their people are the greatest business assets for them. So, don’t lose your best employees for the want of funds. Business loans also allow you to hire new talent and expand your enterprise.
Loans for working capital management: A business can still sustain itself in face of a temporary lack of profits but lack of working capital may force you to pull down the shutters. Cover the shortfall in your working capital with an unsecured business loan to get out of temporary sticky situations.

Where can you apply for unsecured small business loans?

Small businesses often turn to banks for unsecured business loans. But banks have a slow and bureaucratic system for application, verification and approval of small business loans. It may take as many as 20 days for a bank to process and approve your business loan application.

An alternative is provided by new lending products like Lendingkart for business loans in India. A business loan application with Lendingkart can get approved within 24 hours if all your documents and financial details are in order, giving you immediate access to the funds you need.

Furthermore, the application process is completely online which Lendingkart is able to save money on manual labour and in turn transfers the benefits to customers in the form of low interest rate on small business loans. As a borrower, it is a win-win for you.

The best thing about getting a business loan from Lendingkart

Lendingkart offers unsecured business loans.

When you take a loan from a bank, it is a secured business loan, which means you have to give the bank an asset of equal or more value as a collateral. In case you are unable to repay the loan timely, the bank can take over the asset and recover its costs.

An unsecured business loan doesn’t require any collateral, which is what Lendingkart offers. Thus, your capital is not at risk when you take a business loan from Lendingkart.

You can now apply for a business loan from the Lendingkart smartphone app. To know more and apply for Lendingkart business loans, click here.

Demystifying MSME Loans

MSME Loans – Risky and Profitable Business Types

Micro, Small and Medium Enterprises are the largest employment providers in India. Their contribution to overall employment in the country is pegged at 69%. Also, the MSME sector is responsible for almost 45% of the manufacturing industry and drive 40% of our total exports. These are significant numbers, and therefore, the growth of MSMEs has been a priority of successive Indian governments.

However, for growth, the MSMEs need investment, and the readily available source of investment to them is a business loan. Banks and commercial institutions called non-banking finance companies (NBFCs) are the two main providers of business credit for MSMEs in India. An average Indian MSME needs to pass a number of financial litmus tests before it can get an unsecured business loan or a working capital loan.

Financial institutions give priority to businesses which are considered risk-free and profitable. While it can be argued that every business can be prone to risks, there are a few benchmarks which can assuage the lender’s apprehensions.

A Registered Entity

A registered business entity which complies with the laws of the land establishes a trust in your company on the lender’s part. On the other hand, when a business lacks the necessary statutory paperwork, a lender is right to be apprehensive.

Therefore, getting a business registration will not only get you faster loan approvals, but will also remove any doubts about the legitimacy of your enterprise.

Age of Business

The second factor that distinguishes between a risky and profitable business is its age. While a short-term business idea can also be profitable, the lenders usually require at least 6 months of performance reports before sanctioning a business loan or line of credit.

If you are seeking an MSME loan, then it is better to apply for a loan after completing 6 months or more of operations. Another reason to that is because financial institutions place limits on the period within which you can reapply for a loan. For instance, if you are 5 months into the business and your loan application gets rejected, a lender policy may dictate that you can only apply again after 3 months.

That is another reason why you should never apply for multiple loans from multiple lenders at a time.

Credit History and Profitability

The bank or NBFC that provides unsecured business loans will scrutinize your business account statements to assess the risk or profitability of your venture. If you are unable to maintain a consistent cash flow and retain enough cash at bank to meet your liabilities, the lender will put you in the risky category. In case you are making a good profit, the lender will readily offer loan terms.

Also, if you have a steady cash flow and cash at bank but are not repaying your existing loans on time, it will reflect in your business credit history. Such behavior will lower your credit score and increase the risk factor in a lender’s reckoning.

Type of Business

There are certain types of businesses which are considered risky from an investment point of view. For example, dealing in real-estate, jewelry, precious metals, arms and ammunition, crackers, and other perishable goods involve a high risk-to-return ratio and therefore, given lower preference by a lending firm or bank.

If your business falls into the high-risk category, make sure that you have a solid financial report card to get a business loan.

Getting an MSME Loan for your business

A non-banking financial company is more likely to offer better loan terms for a business because of its in-depth scrutiny and flexible policies towards MSMEs. Lendingkart, a leading NBFC lender in India, offers business loans with customized interest rates along with a flexible EMI schedule.

To know more, visit www.lendingkart.com