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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
Quick & Simple
Minimum documentation. No collaterals
One application. Multiple lenders. Increased chances of loan approval
Specific loan products. For specific business needs
Flexible & Transparent
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 Small 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.
The primary distinction between secured and unsecured loans is collateral: secured loans need collateral. A secured loan requires you to declare an asset, such as a car or savings account, whereby the lender may repossess if you default on the loan. Unsecured loans are those that do not demand collateral.
Unsecured loans are the more prevalent of the two forms of business loans, but their interest rates may be higher due to their reliance on your credibility alone. With a secured loan, your security might help you qualify for a cheaper rate or a larger loan amount.
How do secured and unsecured loans differ in their operation?
Secured loans may be more likely to succeed than unsecured loans. While a lender will examine your credit score, history, income, and obligations, securing the loan with a savings account or might increase a lenders' trust to lend to you.
Usually, secured loans provide lower annual percentage rates than unsecured loans. Rates are determined using the same criteria that lenders use to qualify you, which means the value of your collateral may impact the rate.
Typically, secured business loans are repaid in predetermined monthly amounts over many years. Certain secured loans contain variable interest rates, which implies that monthly payments may change as well. For example, TD Bank's secured business loan has a variable rate of 2% over the prime rate, which is the interest rate at which banks determine rates on credit products.
If you default on a secured loan, you face two consequences: your credit will deteriorate, and the lender may confiscate the collateral.
Even one late payment can result in a 100-point decrease in your credit score — and the damage will not be mitigated by the fact that it is a secured loan.
A secured loan can be obtained via a bank, credit union, or internet lender.
They are more prevalent from banks and credit unions and are often secured by a savings or certificate of deposit account, which you cannot use until the loan is fully returned.
Borrowers with outstanding credit (700 or above) have the highest chance of qualifying for an unsecured loan. Lenders determine your eligibility based on your credit score, credit history, and debt-to-income ratio. Certain lenders also consider other data, such as your college education and where you reside.
Unsecured loans generally have fixed rates ranging from 6% to 36%. The lowest APRs are often reserved for the most eligible applicants, while those with fair or poor credit will face higher rates.
Unsecured loans are payable in regular monthly installments over two to seven years. Unsecured loans may be a more secure option for some borrowers. If you default on a repayment, just your credit score will be impacted.
If the loan is in default, which occurs between 30 and 90 days after a payment is missed, it may be transferred to collections, and the collection agency may ultimately sue you.
Online lenders can provide cheap interest rates and other benefits such as quick funding and an entirely online application procedure. If you are currently a customer of these institutions, they may offer you a discounted fee.
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.
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 loan 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 22 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 >1 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.
Loan for Small Business without security are the ones that help the businesses the most. Most small businesses sustain because of such business 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.
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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