How to Apply for Collateral Free Loans for Online Sellers

The rise of Amazon, Flipkart, Meesho, and other e-commerce platforms has changed not just how customers shop but also how businesses sell. From local stores with local reach to e-commerce stores with global reach, you now have more opportunities to grow. As of 2025, there are over 2,36,490 online stores in India witnessing this growth. As with traditional sellers, there are now collateral free loans for online sellers available, too.

Whether you are running an offline business or selling products online, you need funds for various business operations. Unlike offline businesses, however, some online sellers might not have collateral to provide as security. This is where unsecured MSME loans, especially collateral-free loan for eCommerce, prove helpful. Learn how to apply for online seller financing.

What is a Collateral-Free Business Loan?

When you apply for a business loan, you (as a borrower) offer an asset or property to a lender in order to secure a loan. These assets are collaterals with something of value and provide lenders security if you fail to repay the loan. These are secured loans where you are required to provide collateral as security.

A collateral free business loan is a type of unsecured business loan where you don’t need to provide any property, gold, or valuable assets as security to secure a loan. It means you can take up the loan without giving anything as a guarantee. However, the lender can seize your assets if you don’t repay.

Secured vs Unsecured Business Loans

It’s the need to provide different types of collateral to secure a loan that differs from secured and unsecured loans. Here are the differences between secured vs unsecured business loans:

Parameters	Secured Business Loan	Unsecured Business Loan
Collateral	Required	Not required
Interest Rate	Lower because of collateral	Higher
Loan Amount	Higher	Lower
Repayment Tenure	Longer	Shorter
Best Use Cases	Business expansion and covering large capital expenses	Covering operational expenses, short-term cash flow needs

Who Offers Business Loan without Collateral

Between traditional and digital lending, getting a business loan has become much simpler. With a growing number of NBFCs and private lenders, borrowers have a number of choices to get a business loan without collateral. Some of the popular banks, NBFCs and financial institutions that lend MSME loans without security are as follows:

Public Banks	State Bank of IndiaPunjab National BankBank of BarodaCanara Bank
Private Banks	HDFCICICIAxis Bank
NBFCs (Non-Banking Financial Companies)	FlexiLoans Bajaj FinservLendingKartIIFL
Government Schemes	Pradhan Mantri Mudra Yojana (PMMY)Stand-Up India SchemeCredit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

Why Do Online Sellers Need Collateral-Free Loans?

The inability to get short-term loans (38%) is the main obstacle that prevents businesses from expanding. While secured loans have lengthy processes and required security, collateral-free loans offer a flexible and accessible ecommerce funding option without the need to pledge security.

It has more significance for digital or eCommerce sellers as they do not have physical assets. However, they do have a strong digital presence, making them ideal for unsecured loans. Here are the other reasons why online sellers need collateral free loans: 

Manage Inventory and Supplier Payment

Being an online seller, you should keep your stocks ready to meet customer demands. Collateral free loans let you buy stocks beforehand and pay suppliers on time, ensuring business operations efficiently with proper cash flow.

Advertising and Marketing Spends

The need for marketing is more for digital sellers as it’s the very core nature of their business. Business loans allow you to invest in influencer marketing, digital ads and social media campaigns to grow online. It helps you not only increase your reach but sales as well.

Seasonal Spikes and Order Fulfillment

You need extra funds during peak seasons or festivals as the demand is always high during this time. The orders rise sharply, but you can’t meet them without funds. You need it for managing packaging, shipping and labour costs. Collateral-free loans, therefore, easily offer quick access to working capital for online sellers.

Eligibility Criteria for Online Sellers

Apart from being an Indian citizen aged between 21 to 65 years & GST registered, you should meet certain business loan criteria to qualify for a collateral free loan. These criteria help lenders identify the business’ ability to repay the loan. Here’s how you can qualify under online seller loan eligibility:

• Minimum Creditworthiness: Your credit score should be above 700 with a clear credit history. You should also grant permission from the Department of Industrial Policy and Promotion (DIPP) to get collateral-free loans.
• Business Turnover: The business should be operational for 2 years to be eligible for collateral free business loans. Additionally, you should have a turnover of at least ₹40 lakhs within the time period when borrowers set a turnover goal for the business.
• Business Structure: Businesses that are in the form of sole proprietorship, partnership firm, private limited trust/ company, and LLP pass online seller loan eligibility.
• Platform Partnership: The businesses positioned under MSME are eligible for collateral free loans. You must also be selling actively on e-commerce platforms (Amazon, Flipkart, Myntra), giving confidence to lenders due to verified sales data.

Documents Required to Apply for eCommerce Seller Loan

A simple mismatch in MSME loan documents can lead to loan rejection. Follow this collateral free loan application checklist to ensure you have all the documents ready:

KYC Documents	PAN Card (both self and business), Aadhar Card, voter ID card and address proof like rent agreement and electricity bill
Business Proof	GST registration certificate, ITRs (Income tax returns) for the last 1-2 years
Seller ID	Seller ID and partnership proof with eCommerce platforms like Amazon, Flipkart
Financial Statements	Profit and loss statement, bank statement and balance sheet

Top Lenders Offering Collateral-Free Loans to Online Sellers

Choosing the right lender is one of the most crucial steps in applying for business loans and fulfilling your eCommerce and Amazon seller capital needs. There are many lenders who offer the best loan for online sellers. However, you must choose a lender whose eligibility you meet and who also offers favourable terms.

Digital lending has made it easy to get the best loan for online sellers. Several financial institutions offer quick, collateral-free loans for online sellers. Here is an overview of top MSME lenders in India that help new businesses acquire unsecured loans:

Top MSME Lenders India
Lender	Loan Amount	Repayment Tenure	Interest rate	Processing Time	Seller Platforms
FlexiLoans	₹50,000 – ₹50 Lakhs	6-36 months	From 1.2% per month	48 hours	Amazon, Flipkart
Indifi	₹50,000 – ₹50 lakhs	6-24 months	17-20% per annum	24 hours	Amazon, Flipkart
LendingKart	₹50,000- ₹3 Crore	3-36 months	From 9% to 15%	Within 72 hours	Amazon, Flipkart and all ecommerce platforms
NeoGrowth Credit	₹1 lakh – ₹75 lakhs	6-36 months	Depends on sales performance	3–5 working days	Amazon, Flipkart

How to Apply for a Collateral-Free Loan Online?

Many financial institutions and NBFCs offer a fast approval process with minimal paperwork. This process enables you to get instant business loans in India without visiting a branch or pledging any asset. To apply for a business loan online, you should follow the certain steps as mentioned below:

1. Visit the Lender’s Website: Visit the official website of the lender, registered under RBI NBFC and click on “Apply Now” to proceed with the loan application process.
2. Fill in Basic Business Details: Now, enter your name, contact number, email ID, monthly sales and the platform you sell. For example, Amazon, Flipkart, Meesho, etc. 
3. Upload KYC and Financial Documents: Upload your financial documents for verification, including Aadhaar, PAN, GST certificate, bank statement for the last 6-12 months and eCommerce platform sales report.
4. Get Approval and Disbursal in 1–3 Days: Get your application reviewed automatically. Lenders carry out document verification and CIBIL credit rating checks.
5. Approval and Disbursement: You will get a notification about the approval within 48 hours. After approval, the amount will be directly disbursed into your bank account, facilitating instant loans for online businesses.

Tips to Improve Loan Approval Chances

From low CIBIL scores to mismatched documents, there are common mistakes that can lead to business loan rejection. If not rejected, you will have to face a delay in approval, which can hinder your business plans.

As an online seller, you must maintain financial discipline as lenders carefully evaluate the cash flow, creditworthiness and business performance before making a decision. Here are quick tips to improve business loan approval and secure your finding endeavours:

Maintain a Good CIBIL Score (700+)

Your credit score is the most crucial element that lenders assess to ensure your eligibility, as unsecured loans for small businesses don’t ask for collateral. While the CIBIL score ranges from 300-900, a decent score ranges around 700.

If your CIBIL score is low, the chances of your application rejection are very high. On the other hand, if your CIBIL score is high, the lender further scrutinizes your application to check other parameters. A good credit score increases your credibility. So, you should pay your EMIs and credit card dues on time to build a strong CIBIL score.

Keep Financial Statements Clean

Collateral free loan lenders like FlexiLoans check your bank statement to determine the cash flow of your business. This is why you must avoid irregular deposits and sudden large withdrawals as it can lead to delay in approval.

Avoid Cheque Bounces

Regular check bounces lead to poor financial discipline and result in automatic rejection. For this reason, you must always make sure that you have sufficient funds in your account before issuing checks.

Show Steady Sales Performance on the eCommerce Platform

You must always try to keep your sales consistent every month. Selling on eCommerce websites regularly shows that your business is active. If your sales have a positive trajectory, it tells the lender that the business is growing and doing well. It, thereby, increases the chances of getting your loan approved.

Government Schemes Offering Collateral-Free Loans

The government of India has launched different funding schemes that support several startups and small businesses. As a new digital entrepreneur, here are all the government MSME schemes without collateral you have access to:

CGTMSE loan (Credit Guarantee Fund Trust for Micro and Small Enterprises)

CGTMSE is a government scheme launched by the Ministry of MSME and SIDBI. Under this scheme, entrepreneurs can get up to ₹5 crores as unsecured loans for small businesses. The scheme offers your financial assistance without any security or collateral.

It covers businesses involved in manufacturing, retail trade and services. It also acts as a guarantor and covers up to 85% of the total loan amount in instances of default. Hence, the scheme appreciates job creation, innovation, and financial inclusion so that you can scale operations and improve productivity. 

SIDBI Loans

The key objective of SIDBI is to offer loans to MSMEs so that they can fill their financial gaps and facilitate development. SIDBI funding aims to make small and medium enterprises (SMEs) globally competitive. Therefore, it offers different products under the scheme.

SIDBI Make in India Soft Loan Fund For Micro Small and Medium Enterprises (SMILE)

• The priority is given to the services and manufacturing sector under SMILE
• The repayment period is up to 10 years 
• In case of loans up to ₹2 Cr, your business gets loan amount coverage under the Credit Guarantee Scheme.

SMILE Equipment Finance (SEF)

• The minimum loan amount is ₹10 Lakhs under this scheme.
• The repayment period is up to 72 months 
• Businesses that are financially stable and operating for a minimum of 3 years.

Loans under partnership with OEM

• The maximum loan amount is ₹1 Crore under this scheme.
• The business gets loans for Plant and Machinery 
• The repayment period is up to 60 months 
• Loans are given to businesses that are financially stable and operating for a minimum of 3 years.

Conclusion

The eCommerce market in India is projected to grow to $363.30 billion by 2030. It shows that the market offers great opportunities for online sellers to grow. With the help of collateral free loans for online sellers, you can manage cash flow, restock inventory and invest in marketing without putting personal assets at risk.

The right financial support at the right time can make all the difference. Looking for fast, collateral-free funding for your online store? Apply with FlexiLoans to get hassle-free approval, flexible repayment options, and instant loans for your online business today! 

FAQs: Collateral-Free Loans for Online Sellers

Q. 1 Who can apply for a collateral free loan?

Ans: Any registered online seller with a minimum business vintage of 2 years, a valid GST number and positive sales on e-commerce websites can apply.

Q. 2 Can I get a loan without ITR?

Ans: Yes, you can get a business loan without filing an ITR (Income Tax Return). While traditional banks essentially ask for ITR, NBFCs and FinTech companies like FlexiLoans can extend business loans without ITR.

Q. 3 Will a business loan without collateral affect my credit score?

Ans: Timely repayments can improve the credit score. However, delays and defaults in repayment can negatively impact it.

Q. 4 Is GST mandatory for business loan approval?

Ans: No, it is not mandatory. You are only required to pay GST once when you are borrowing money. This component in loan approval has reduced the tax burden and made the process hassle-free.

Q. 5 How much loan amount can I get?

Ans: The authority can provide loan amounts, typically ranging from ₹50,000 to ₹5 crores. The loan amount typically depends on your monthly revenue, credit history, and business performance.

Q. 6 Is FlexiLoans safe and RBI-registered?

Ans: Yes, FlexiLoans is a registered Non-Banking Financial Company (NBFC) with the RBI. The entire loan process is supervised under RBI-mandated guidelines, making it a legitimate financial institution.