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 democratized the Indian small business loan market. New age lenders use the power of the 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 less than 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.
Also Read: Reasons why Unsecured Business Loans have Become Popular in India
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An unsecured business loan is not given against 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 a 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.
Frequently Asked Questions
Is an unsecured business loan a safe option for growing a business?
Unsecured business loans in the Indian market offer advantages like quick access to funds, no collateral requirement, and flexibility in use. However, they come with disadvantages such as higher interest rates and limited loan amounts. Whether it’s a safe option for growing your business depends on your risk tolerance and financial situation. Evaluate the benefits and drawbacks carefully before opting for an unsecured business loan.
How can I determine if my business is eligible for an unsecured business loan?
To determine eligibility for an unsecured business loan in India, consider the advantages and disadvantages. Advantages include no collateral requirements, quicker approval, and flexibility in fund usage. However, eligibility depends on factors like credit score, business performance, and repayment capacity. Benefits include easier access to funds, but the absence of collateral may lead to higher interest rates and lower loan amounts. Carefully assess your financial health and research lenders to find the best fit.
How can I improve my chances of getting approved for an unsecured business loan?
To enhance your approval odds for an unsecured business loan in the competitive Indian market, consider the advantages and disadvantages. Highlight your strong credit history, steady revenue, and business plan. Emphasize the benefits of unsecured loans, such as no collateral requirements and faster approval, while acknowledging the higher interest rates and stricter eligibility criteria as disadvantages. Present a compelling application that showcases your ability to manage the loan responsibly.
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