Top 5 Reasons Why Unsecured Loans Help Small Businesses Grow Faster

Small businesses, in general, are prone to initial downfall. This isn’t always their fault, but in certain scenarios, it comes about as an inevitability. To get a business loan, especially a business loan in India, that too for a small business can be an arduous task. It is not entirely mind-boggling how that is the case for small businesses if we analyse it further. A small business will often approach a Bank or an NBFC for an MSME business loan and be promptly refused. The loan amount required by such businesses is pretty minimal, and Banks and NBFCs don’t consider them profitable enough to be worth the bother and paperwork.

Additionally, these institutions require collateral against which they might consider offering a loan. A newly formed or even an older small business doesn’t possess such collateral assets to fulfill these requirements, hence applying for the loan. It isn’t No man’s land for lending when it comes to small businesses. Several new Fintech firms, banks, NBFCs, and Business Loan Providers offer Unsecured Business Loans that are collateral free and offer competitive interest rates. FlexiLoans is an NBFC that provides business loans to all SME, & MSMEs pan India. It offers collateral-free loans at highly desirable interest rates and flexible terms.

Several businesses approach venture capitalists or angel investors for funding for their projects. However, persuading these individuals to invest in any business venture is a difficult task. Approaching these venture capitalists without a complete business plan is often met with rejection. Contacting a bank or a non-banking financial company, on the other hand, is much easier. Furthermore, many angel investors demand a percentage of the company’s profits in exchange for their investment. Company owners frequently lose sole ownership of the company when seeking funds without incurring debt.

However, when applying for a business loan, you do not have to worry about losing or sharing ownership. Any profit a business owner makes as a result of using a business loan is solely for his or her benefit. The owner is under no obligation to share any profits made by the company with the lender.

There are more and more Unsecured Business Loan Lenders in India by the day. This article will give you Top 5 reasons why it would be a good idea for a Small Business to get an Unsecured Business Loan and the induced growth that comes with it.

Top 5 reasons to get an Unsecured Business Loan

Access to Working Capital

The most basic monetary requirement for any small business is their working capital. Working Capital is required to run daily operations without a hassle. However, this particular funding need isn’t huge, considering the fact that you’re a small business. This hampers any Business Loan Providers to be convinced to make these funds available to the business.

This problem is essentially eliminated by Unsecured Business Loans as there’s no absolute reason for acquiring the loan that you must provide the lender to get one. This takes away the necessity of using all the funds you garnered in the loan amount for a single purpose, leaving you free to utilise it as working capital.

This will allow any small business enough breathing room to expand their business beyond their current circumstances. That is reason enough for any new business to get a business loan without collateral, another hamper that expunges working capital for a business.

Timely access to Unsecured Business Loan

The most significant advantage is the ease and speed with which an unsecured loan for a small business can be obtained from a FinTech company. The majority of loan providers have made it easier for borrowers to obtain a business loan. By visiting the websites of these loan providers, you can now apply for a small business loan from the comfort of your own home or office.

These websites are extremely user-friendly, with online guides that walk borrowers through the application process for a business loan. These websites also display various commercial loan features and offers. A borrower can browse the various business loan options available online and select the one that best meets the needs of his or her company.

The processing time is longer when applying for a business loan through a bank or an NBFC because more paperwork is involved. The loan requires collateral and guarantors, which adds to the paperwork. Unsecured loans from FinTechs, on the other hand, are much faster; the process is mostly completed online, saving both the borrower and the lender time assembling the necessary business documents.

Requirements can happen at any time and cannot be postponed. You can’t afford to waste time filling out lengthy unsecured loan application forms and gathering the necessary business documents as a small business.

Online Business Loan and instant access to funds

Most FinTech companies provide online applications for unsecured loans, which can be completed quickly with a mobile app. Furthermore, all required documents, including bank statements, previous loan statements, tax statements, business invoices, and KYC documents, must be uploaded online.

The documentation required to apply for an unsecured business loan is minimal. Borrowers must first submit scanned copies of their identification, proof of address, SPDC, and a canceled check. Some loan providers may also require certification of business existence, bank account statements, and relevant financial documents to check your company’s history.

Any business loan application can be quickly and easily processed using the online application. Suppose the borrower meets all of the eligibility criteria established by the business loan provider. In that case, the loan application may be processed much more quickly, and the loan amount may be sanctioned immediately.

Unsecured lines of credit are financing arrangements that make money available for small business ventures on a revolving basis. Because the borrower must pay consistently, these arrangements increase the lender’s confidence. After the borrower repays the loan, the lender may be persuaded to extend a larger loan.

Flexibility of Unsecured Business Loans for New Businesses

When applying for a business loan, you must specify the loan’s purpose. Assume that if you designate a fund for business expansion, it can only be used for that purpose. This means that the loan is ineligible for use in any way. However, when you take out an unsecured loan for a fin-tech or DSA, you have complete control over how the funds are spent. You may use the funds for any purpose you see fit, including marketing or business expansion.

Most loan providers offer unsecured business loans as a form of short-term credit. The term of an unsecured loan ranges from 12 to 60 months. This allows business owners to stop paying long-term loan repayment EMIs. Because of the shorter loan term, borrowers will find it easier to maintain a positive cash flow position. Many business loan providers now offer flexible loan repayment options to make the repayment process as simple as possible.

Benefits of Unsecured Business Loan Interest Rates

In addition to the many innovative services provided by technology, FinTech firms provide unsecured loans at the most competitive and affordable rates. On the other hand, the services offered are of the highest quality, and one of the advantages is the flexibility in terms of unsecured loan repayment. This frees up resources for the company to focus on expansion. Unsecured small business loans are also available, depending on the company’s ability to grow and profit. However, there is always some wiggle room when it comes to loan approval. Furthermore, no asset must be pledged.

Unsecured loans have the potential to help small businesses grow. This is demonstrated by our diverse range of unsecured loan products tailored to the needs of small businesses across all industries. Aside from interest rates and processing fees, all unsecured loan products have a 2% processing fee. Aside from the interest rates and processing fees, there are no other fees or charges.

Conclusion

If you are an older MSME or a new business altogether, you can see how beneficial an Unsecured Business Loan can be for your business. The interest rates might be higher for the loan amount, but it’s worth it for the peace of mind it offers. Ensure that you weigh all the benefits and drawbacks of a business loan and determine whether what the business loan provider is offering you aligns with your business goals. Applying for an unsecured business loan makes sense if you are confident in your company’s progress and believe you can afford the high-interest rates.