Unsecured loans can give a business the boost it needs to grow, even if it’s small, or has no assets to pledge. The processing is seamless, and documentation is also minimal. In addition, flexible repayment structures make these loans more attractive. All you have to do is find out if you qualify for a collateral-free Business Loan and then apply for it in the right way.
Who can Apply for a Business Loan Without Collateral?
Any business with a CMR score of up to 6 and a CIBIL score above 700 can apply for a Business Loan without collateral. These include sole proprietorships, partnerships, and private limited companies. Professionals such as doctors, architects, and engineers can also take a collateral-free Business Loan. Majorly, the following sectors can get an instant Business Loan.
- B2B Service providers
- Manufacturers
- Distributors
- Wholesalers
- Traders
How to Find an Ideal Business Loan Without Collateral?
- Research loan options and find the right one – There are many great Business Loan products available in the market. Compare their features, customer service, repayment period, upfront fees, and interest rates. Choose the one that meets your eligibility criteria and best suits your requirements.
- Make sure you meet the eligibility criteria – Different loan products may have different eligibility criteria. So, before you apply, check the requirements to see if they suit you. Meeting the criteria can help increase the speed with which you get loan approval.
- Check your credit score – Your business’s CMR score and your CIBIL score determine your creditworthiness. When you have a CRM of up to 6 and a credit score of above 700, you can easily qualify for a Business Loan. These scores reveal the eligibility of your business and influence the loan amount, business loan interest rate, and loan tenure. If you have a low credit score, make sure to improve it by paying off any existing debt and limiting your credit card usage.
- List of important documents – An unsecured loan requires the submission of important documents like KYC details, business documents, and bank statements. It is essential to collect them in advance to make the loan application process easier and faster. Make sure you don’t miss any documents, as this may lead to the rejection of your application.
- Complete the application carefully – Applying for a Business Loan can be simple if you follow all the steps mentioned above. While filling in the PAN number, annual turnover, or even the nature of your business, fill them out carefully and double-check them before submission. The numbers and data provided will be verified, so make sure to put in the correct details.
Benefits of Collateral-Free Business Loans
Unsecured loans are beneficial for businesses that need instant funds in a quick span without hurdles. The main advantages include:
- No warranty or third-party guarantee is required
- Attractive and competitive interest rates
- Flexible repayment period and options
- Fast and hassle-free processing of applications, as approval is done automatically by the credit decision system.
Eligibility Criteria Needed for Unsecured Business Loans
It is important to have a good credit score. In addition to having a minimum credit score of 700 & above, you must also keep your credit utilization rate below 30%. Other important criteria required to secure a Business Loan have been listed below.
- You must be at least 21 while applying for the loan and under 65 at the end of its tenure.
- Your business should be a proprietorship/private limited company/closely held non-listed company/ partnership firm involved in manufacturing, trading, or services.
- Your business must show a minimum turnover of Rs 1 crore and report audited financial statements for the last 24 months, routing the majority of the business through a banking system, or capturing your turnover in the last 12 months through GST returns.
- Your business must be operational for a minimum of 3 years of total business vintage.
Steps to Apply for a collateral-free Business Loan
Step 1: Do detailed and complete research on different loan products. Lean towards the most flexible loan types that suit your needs.
Step 2: Make sure you qualify for an unsecured Business Loan. Eligibility details are given above.
Step 3: Prepare all required documents for a smooth application process.
Step 4: This is the final step and will involve filling in the application form. Make sure to fill in all the necessary information to avoid rejection due to incomplete forms.
Conclusion
An unsecured Business Loan ensures cash flow without having to worry about tedious paperwork and assets. It’s a quick and easy way to cover business expenses. With the new age NBFC Clix Capital offering instant business loans dedicated to the young leaders of India, Business Loans have become an all-inclusive loan type. Make sure to follow the steps discussed above to ensure a smooth Business Loan application process.