It is no secret that SMEs have to depend on external sources of funding to run their businesses because they have limited cash reserves. However, when they approach banks, private lenders and NBFCs to avail loans for small business, they are left disappointed.
Traditional lenders perceive high risk in providing loans to SMEs. Moreover, SME loans are usually of small ticket sizes, so they are not much profitable for them. So, even if banks agree to provide small business loans, they seek collateral, a condition which SMEs are not in a position to meet. At the same time, the loan process of traditional institutions is very tedious and time-consuming.
In such a scenario, collateral-free loans offered by fintech companies can come to the timely help of SMEs. Collateral free or unsecured loans as they are also called, these loans enable SMEs to borrow capital without mortgaging any personal or business asset. Further, fintech companies conduct all their operations digitally. This means that SMEs can fill out the application and upload documents online. Online lending companies such as FlexiLoans approve and disburse loans for small business in as less as 48 hours! This ensures that SMEs can deploy the loan amount quickly into the business.
Unsecured business loan in India is helping SMEs grow their business in various ways:
Positive Working Capital
Working capital is a must for businesses to run day-to-day operations smoothly. Most of the times, it is difficult for SMEs to maintain a regular cash flow owing to which working capital is always a constraint. Unsecured business loans can enable SMEs to meet their short-term fund requirements such as managing accounts payable, paying salaries and utility bills, seasonal sales and other routine expenses. Small business loans can act as a cash cushion when the negative cash flow is a threat. This way, SMEs can focus on long-term growth without worrying about short-term liquidity.
When SMEs decide to take their business to the next level – whether to cross the geographical barriers, launch new products, shift to a bigger office or hire more people, they certainly need funds. SME loans are designed in such a manner that they can encourage the small businesses to take the leap with confidence and grab every growth opportunity that comes their way.
Flexibility of Purpose
The biggest advantage of collateral free loans lies in the fact that they can be used for any business purpose such as:
- Equipment/asset purchase
- Vendor financing
- Line of credit
- Merchant cash advance
So, no matter what the nature of the business requirement is, SMEs can expand their business through unsecured business loans.
FlexiLoans offers quick, flexible and collateral free loans up to Rs1 crore and with minimum documentation to SMEs. Your business growth is just a click away!