Looking for financial support to start or expand your business but don’t have an asset to pledge as security? Don’t worry! Thanks to unsecured business loans, it has become convenient and easy for borrowers to get quick access to funds without collateral. Many financial institutions and NBFCs have now introduced business collateral-free loans, making the application process much easier than ever and helping users fulfil their goals.
This article explores how you can apply for a loan without offering collateral and discusses tips to increase your chances of getting a quick approval and disbursement of funds.
Understanding Collateral-Free Business Loan
A loan taken for business without pledging an asset as security is a collateral-free or unsecured loan. Instead, lenders determine borrowers’ financial stability by checking their CIBIL score, business performance and income.
Here are the reasons why a business loan without collateral is beneficial:
- Users don’t need to keep their assets, like houses or jewellery, as collateral.
- It offers users peace of mind as there is no risk of losing their assets.
- Since there is no collateral involved, the loan is processed quickly.
- Users can use the funds as they prefer without any restrictions from the lender.
- Many online lenders offer flexible repayment options, allowing users to choose a tenure based on their financial situation.
Eligibility Criteria of Collateral-Free Business Loans
Before making an application, make sure you qualify for the following essential criteria:
- The business must be running for a minimum of 3 years and profitable for at least 1 year.
- The borrower must have a good credit score (typically more than 750) to show creditworthiness.
- The applicant must be in the range of 21 years to 65 years. However, when applying for a business loan online, check the age requirements, as it can change from lender to lender.
- Startups, MSMEs, sole proprietorships, partnership firms, private limited companies, trust and limited liability partnerships are eligible to apply.
Steps to Apply for a Collateral-Free Business Loan
Follow the steps to apply for collateral-free loan:
- Research different lenders, including banks, NBFCs and other platforms, before you proceed with the business loan apply process. Ensure to compare their interest rates, additional charges and terms and conditions and choose the one that best suits your needs.
- Check the eligibility criteria of the platform you’ve chosen and make sure you qualify for the same.
- Gather all the necessary documents, including PAN card, aadhar card, bank statements, income tax returns, GST returns and P&L statements.
- Fill out the application form by entering the correct information and uploading all the documents.
- The lender will ask for your credit score to determine your creditworthiness, review your application, and make sure everything is correct.
- Once the application is verified and approved, the loan amount will be disbursed in some time.
Tips to Increase Your Chances of Loan Approval
Let’s explore some of the pro tips that will help you increase your chances of getting quick business loan online approval:
- Maintain a good credit score to get the loan at a low interest rate and favourable terms.
- Avoid overborrowing or underborrowing, and choose the right loan amount.
- Be prepared with all the necessary documents to avoid unnecessary delays.
- Choose a reliable platform like Bajaj Finserv that offers convenient no-collateral business loans at competitive rates and flexible tenures and charges no hidden fees.
Conclusion
Applying for a loan for your business without collateral has now become convenient and much easier than ever. Make sure to maintain a strong credit profile, have all the necessary documents and choose the right online lender for a seamless process. With the right financial support, you can achieve your business goals and take it to the next level.
