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MSMEs that meet the following criteria are eligible for loan without security'
We work with specific segments and use our understanding to make loan better
Minimum documentation. No collaterals
One application. Multiple lenders. Increased chances of loan approval
Specific loan products. For specific business needs
Choice of loan tenure & repayment modes. No hidden charges
Every small business has to think of expansion at some point. Whether it is in terms of operations, size, or production capacity. In order to grow, small businesses have to take such a decision.
When speaking of expansion, there are many things that a small business owner needs to look out for. However, the most important one is; funds.
Buying a piece of land, advanced machinery, hiring skilled workers, or an increased amount of raw materials are some of the essential expenses that small businesses have to bear during the expansion process. However, managing the funds for all such expenses can be nothing short of a challenge, and turning to the banks seems like a much feasible option.
Banks play a crucial role in the life of a business and in times like these they can be a great remedy. Among the many lending products that are offered by banks and NBFCs (Non-Banking Financial Company), business loans are one of the best options for businesses seeking financial aid.
Secured loans have higher loan amounts, low-interest rates, and longer tenure. Moreover, secured loans require collateral for approval and have an elaborate application process.
Loan for business without security have lesser loan amounts and they are mostly opted for by small businesses. These loans don’t require any form of collateral and have a quick approval process. Business loans without securities come with high-interest rates and smaller repayment tenure.
While at first, businesses used to be the work of the Western people, especially so in India, it began changing a little after Independence. Of course, there have been several notable businessmen before 1947 too, but it is only after this period that people started taking businesses seriously.
Running a successful business does not necessarily require higher education. Basic education that teaches arithmetic and languages is enough to help a person hone their skills. Of course, higher education will mean a better understanding of the business. However, in a developing country like India, most people who cannot afford the same, and hence remain out of the service-goers loop, resort to business.
The availability of loans without security is a big advantage for businesses. This we will discuss in the next segment.
The youth of the country has realised that there is more money in running a business than in securing a job. This has played a pivotal role in shaping the mindset of the younger generations.
Now that we have explored the reasons behind the rise in businesses, we will take a look at loans granted without any security.
When we talk about SME unsecured loans, we generally mean to say 'unsecured business loans'. If you were wondering why we said so many things about business previously, here you will explore the reasons. When it comes to startups or small businesses or maybe even the businesses of medium scales, we talk about these loans.Small or medium-scale businesses, as do some startups, find it challenging to invest the amount of money required to start or maintain the business.
These businessmen often do not have the money to produce collateral. In this scenario, had the unsecured small business loan not existed, it would have been quite difficult for these people to sustain. In that light, these loans provide many benefits to this genre of entrepreneurs.
If the previous bit was not convincing enough, this surely would be. These two points play significant roles in the life of a businessman.
Say goodbye to hefty collaterals: When it comes to collaterals, all businessmen shudder. And the reasons are valid. Often, these collaterals require the said businessmen to leave more money in the custody of the lending party, than she is aiming to borrow. Added to this is the hefty interest that keeps accumulating. This is not possible for many small businesses. This is when business loans without security come into play. These small loans do not require you to provide large amounts of collaterals, and hence they make running the business much easier.
No frowning about meeting the small loan criteria: Small business loans often have a list of criteria that you have to meet before the bank actually sanctions the loan. In that case, it can get really cumbersome and uncertain. And for a small business, a lot depends on acquiring the loan amount. However, in cases of unsecured loans, the criteria are minimal. They are easy to meet and do not cause unnecessary hassles.
Banks: These small loans are available from the banks. Both private and public sector banks are known to sanction these loans. You can also go to their respective websites to avail the unsecured business loan online.
Non-Banking Financial Companies or NBFCs: Non-banking financial companies or NBFCs are the ones which are not banks but lend out money, nonetheless. These companies often do so without taking any security deposits. Hence, they are quite popular among small businesses.
Lenders like Indifi evaluate the applicant’s request based on some key parameters during the approval process. Here are the most common ones.
The ideal age criteria for a small business loan is around 21 to 65 years.
Lending companies provide unsecured loans to applicants that have a profitable business. Profitable businesses ensure smooth payments and have lesser chances of defaulting.
Businesses that are >2 years old are ideal applicants for small business loans and get faster approvals.
Credit score is represented in the form of numbers and they depict an applicant’s creditworthiness. Applicants with higher credit ratings have higher chances of loan approval.
Banks and NBFCs refer to the credit score and business performance of the applicant for repayment security. Therefore, unsecured loans don’t require any collateral.
Flexible and quick process
You can apply for an unsecured loan from anywhere and use any mode of application i.e. online or manual application. Since most of the important documents are submitted at the time of application, the loan is sanctioned as soon as the documents are verified.
No hidden charges
Unsecured loans don’t have any hidden charges, as lenders like Indifi mention all of the charges like loan processing, taxes, interest, and more at the time of application.
Loans for small businesses without security are the ones that help the businesses the most. Most small businesses sustain because of such loans. Of course, the rate of interest remains higher than normal, but that is ultimately better than spending more than what is required on loans that require Collaterals. Hence, the popularity of unsecured loans.
When asked, most small businesses in India shared that access to loans without security is the biggest roadblock to growth plans. Indifi ensures that the right loan is available at the time of need. By matching the profiles with multiple lenders including banks and NBFC improve the chances of getting a loan. With us, hiring new employees, purchasing more inventory, taking more orders, upgrading equipment and boosting their marketing efforts is possible like never before.
Applying is quick and easy and typically takes less than 10 minutes. We ask for basic information about you and your business. Securely connect your bank information so we can assess your business without long forms, waiting in line or having to dig up old paperwork. Your association with business services who we have partnered with helps you get more fitting loans.
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