Managing capital is essential for the sustainability of any firm, large or small. However, some businesses regularly fail to develop finance solutions via good planning and end up in an unanticipated financial crisis.

To establish a firm, restore an existing one, or fund future expansion and growth, company owners may find that a small business loan is the best option. An instant business loan could be used to meet working capital needs, acquire equipment or machinery, or enhance the cash flow of the firm, among other things.

However, when you're already in financial difficulties, offering collateral might exacerbate your situation. You would not like to risk your asset to obtain short-term financing for your firm. This is where an unsecured business loan for MSME may help. Without committing any collateral, you may obtain a loan of between 50,000 to 10 crores.

What is an Unsecured Business Loan?

Unsecured financing requests are typically faster and simpler than secured financing applications, which means that funds may frequently be obtained within a few days. Because no collateral is necessary to get this form of loan, the borrower faces less risk. Since the credit history is being considered, unsecured loans for business can’t be acquired by persons with inferior credit scores.

If you want to have a cash influx without putting any assets on the line, then an unsecured MSME business loan will be the best bet. The best thing is that the creditor will not ask for any assets as collateral. You can pay back the loan to the creditor in monthly EMIs.

Unsecured Business Loan Features

Businesses sometimes require more finance or financial assistance to continue out everyday operations or grow their business. Although there are a variety of possible solutions to these issues, among the easiest is to obtain a business loan. Now, the logical issue is whether to take out a secured or an unsecured loan.

While secured business loans provide lower interest rates, firms are frequently attracted to unsecured loans due to a few of their advantageous aspects. Whether you're a small company owner trying to extend your reach or needs more money to replenish your inventory, a collateral free business loan might be an excellent source of funding.

• Without Collateral

Unsecured small business loans have several clear advantages. One of the most evident is that they do not require collateral. Every business needs cash to expand, but not every firm possesses the assets necessary to get these funds. Unsecured loans are a type of lending that does not need collateral, making it simpler for smaller firms to meet their financial obligations without possessing appropriate collateral.

• Effortless Application Process

Additionally, a collateral-free loan saves you the time and stress of a lengthy and onerous application procedure. To reduce your paperwork and documentation to a minimum, you can apply for an online business loan. This is even more necessary now that we are attempting to exercise social distance in a post-COVID environment.

• Rapid Disbursements

Unsecured loans process significantly more quickly. Since lenders are not required to appraise the actual asset, the application can be submitted and processed online. The loan might be sent to your account as soon as a week after your application is submitted. Certain fintech firms have shortened the loan evaluation process and may now disburse funds within three working days. As a result, an unsecured business loan for SME in India might be a lifeline when you want an immediate infusion of capital to sustain your firm.

• Repayment Options

Unsecured loan repayment choices are fairly versatile, allowing businesses to choose a payback plan that fits their needs. This enables them to prevent needless troubles in the long run and to avoid any payback failures.

• Amount of loan that is not restricted by the asset's worth

The amount issued as a secured loan is often determined by the land or asset offered as security by the borrower. The loan amount is often between 60% and 70% of the item's market value, as determined by the lender. Unsecured loans in India are not subject to such restrictions, and the lender's decision to approve the loan is entirely based on your credit score and the cash flow of your firm.

• Can Help You Improve Your Credit Rating

Yes, even with a low credit score, you may qualify for an unsecured business loan in India from FlexiLoans. Lenders consider your company's profitability, not your credit history. This is a significant benefit for small business owners with low or no credit ratings.

However, if you want to improve your firm's credit rating, a term business loan from FlexiLoans is an excellent option. Repaying the debt boosts your credit score tremendously. With a good credit score, you might benefit from cheaper interest rates on future loans. As a result, they are an excellent approach to improve your credit rating. And besides, returning a loan improves your credit score significantly.

Unsecured Business Loan Interest Rates

Unsecured Business Loan EMI Calculator

The Unsecured Business Loan EMI Calculator is straightforward, and anyone can easily calculate their EMIs. To know exactly how much you will be paying every month, you will have to know specific details about the loan. 

Three main criteria are critical while calculating the EMI. You will have to know the total loan amount and the tenure of the loan. Along with this, you will also need the business loan interest rate. You can put these three pieces of information in the unsecured business loan EMI calculator to calculate the EMI amount.

How to Apply for an Unsecured Business Loan?

• Online Application:

Log on to the FlexiLoans website and complete the application form by correctly filling in the relevant information. FlexiLoans will use these details to assess your eligibility for the unsecured business loan.

• Upload the required documents online:

Upload all necessary documents, such as KYC Documents, Current Account Bank Statements, and Business KYC Documents.

• Credit Analysis:

We'll assess your business results and operations to calculate the amount of money you'll be eligible to borrow and the interest rates that will apply. Our loan officers will assist you in understanding the bid and making the right decision.

• Loan Disbursement:

FlexiLoans will share the loan agreement after verifying the documentation and approving the loan. The funds are disbursed to the applicant's account within 48 hours of signing the document.

Unsecured Business Loan Eligibility Criteria

Collateral-free loans are often referred to as unsecured pre-approved loans. Additionally, they are only usable for a limited time. In plain terms, there is no need to risk financial liquidity when a profitable option exists in the shape of obtaining a collateral-free loan for a variety of objectives.

If you've been considering how to get an unsecured business loan, here's all you need to understand about the qualifying requirements for collateral-free loans:

• Credit Rating

The primary requirement for obtaining a collateral-free loan is that the borrower has a respectable credit score. There is no similarity between conventional loans and collateral-free loans, although, in the latter situation, the bank contacts individuals directly to provide loans. This implies that without a respectable credit score, no lender will consider an organization for a business loan.

• Bank Balance

While financial institutions have a preference for lending to current clients, this does not imply they would deny requests from new clients for the same purpose. This is when the importance of the financial balance comes into play. Lenders frequently require bank statements (usually six months) to ascertain the average balance of the borrower's bank account and to acquire more insight into the borrower's repayment capabilities.

• Earnings

Without a doubt, when it relates to collateral-free loans, lenders frequently request 3 years of income tax returns, as well as a business profile, balance sheet, and profit and loss account. Naturally, people who have a steady stream of solid income have a less stressful loan experience.

• KYC Documents

Regardless of whether a loan seeker meets all other qualifying conditions, lenders will never consider giving loans if the borrower fails to show identification. Without the requisite ID Proofs, financial institutions will not consider making collateral-free business loans.

• Repayment Record

The repayment record, or more precisely, the credit history established by a loan seeker's prior borrowings (if any), serves as a tool for determining the loan seeker's credibility. If a borrower has previously defaulted on a payment, lending institutions will be notified instantly, as the credit rating agency will instantly decrease the borrower's credit rating as a result of the default.

Unsecured Business Loan Lenders in India

Online lending firms are specialist NBFC that have moved the full process of obtaining a business loan online through application to disbursement. They operate on a digital and minimum documentation basis, requiring the borrower to submit just PDFs of the borrower's KYC and financial papers to process the business finance application.

The company owner may apply for a business loan using an online lender's website or mobile application based on availability. Assuming your profile fulfills the lender's criteria, your business loan application will be granted, and funds will be issued within the next few business days.

If the business's yearly gross revenue exceeds Rs. 10 lakhs, the owner may apply for an immediately unsecured loan of up to Rs. 20 lakhs with a maximum payback term of 36 months. You can utilize the loan proceeds for any business-related purpose, including working capital requirements, machinery purchases, and infrastructure upgrades. Additionally, many online lending firms give the option of foreclosing the company loan without paying any further fees following the payment of a few EMIs.

Online lending firms use flexible business loan qualifying criteria, including an individual credit review in addition to the CIBIL score, to determine a borrower's creditworthiness. This increases the likelihood of being approved for an SME loan. They adhere to a transparent procedure and keep applicants informed of the status of their business loan applications by SMS and email. The following are the primary benefits of obtaining an instant unsecured business loan from online lenders:

• Convenience:

Online lending companies enable you to apply for an unsecured business loan from the comfort of your own home or workplace. The user is not required to attend an office or meet with an officer; all that is required is a few clicks on his phone or pc to process the application. Additionally, he will receive regular information on the status of the application by SMS or email. As a result, he would always be informed.

• Transparency:

Online lending firms operate in total transparency. Every detail is available on their website or mobile application. This enables educated decision-making, which benefits the business's financial state.

• Flexibility:

Online lending firms offer a diverse range of business loans to meet several company-related needs, many of which are tailored specifically for small enterprises. Unsecured business loans, capital financing loans, term loans, working capital loans, and machinery loans are all available to entrepreneurs.

• No Prepayment Fees:

Online lenders allow you to return the whole outstanding balance before the completion of the tenor without paying any penalty. This will assist in reducing interest payments.

With such broad perks on offer, it is not an exaggeration to state that online lenders are primed to become the preferred alternative for business owners in need of immediate funding.

Taking an unsecured loan is a great way to boost your business and take it to the next level. Now, all you have to do is take a loan from a trusted creditor and make better use of it. Make sure you can trust your creditor so that they do not cause any problems in the future.

Documents Required for Unsecured Business Loan

• Personal KYC: PAN card
• Residential Address Proof (Anyone): Rent agreement, driver’s license, Voter’s ID, Ration card, Aadhaar Card, Passport
• Banking: Last six months’ current account bank statement
• Business KYC (Anyone): GST registration certificate, shops and establishment certificate
• Financial documents (For loans greater than 20 Lakhs): 2 years Audited financials, Last 2yrs ITR, GST Returns of 6 months

Frequently asked questions