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Collateral-free Business Loan

Looking for a loan for a business without security? Get a collateral-free business loan of up to ₹80 Lakhs on flexible repayment terms.

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Minimum Interest Rate

14% p.a.
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Maximum Loan Tenure

96 months
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Maximum Loan Amount

₹80 Lakhs

A collateral free business loan enables you to access working capital for your business. This includes buying new machinery, sourcing talent, or expanding your business operations without providing any assets as security for the credit.

What is a Collateral-free Business Loan

Large businesses and industries require significant capital investments that can total tens, hundreds, or even thousands of crores. Hence, they may not need loans without collateral as the maximum offered is quite limited.

Employees and proprietors of MSME businesses typically need collateral-free financing (micro, small and medium enterprises). MSMEs have a major impact on the expansion of the Indian economy. As such, lenders offer a wide variety of loan options, which include:

  • Employee personal loans

  • Loan refinancing

  • Loans to renovate a home or a company

  • Capital for small and medium-sized businesses or loans used as a down payment on personal loans, such as those for a house, a car, or other purchases

Features and Benefits of Collateral-Free Loan

Collateral-Free

You need not offer any asset, like real estate or machinery, as security to acquire funding.

Minimal Documentation

You can get a loan for a business without security with basic KYC documents and business proof.

Instant Processing

A loan for a business without security is processed quickly, as there is no collateral to verify.

High Value Loans

You can get up to ₹80 Lakhs or more as a loan for starting a new business without security.

Competitive and Flexible Interest Rates

Lenders offer collateral-free loans for startups and businesses at competitive rates. This helps reduce overall interest, enabling you to achieve business goals affordably.

Flexible Repayment Options

Lenders offer collateral-free loans for MSMEs with repayment flexibility. This helps you to repay on time and as per your cash flow without any financial strain.

Online Account Management

Most lenders offer online loan management services, making repayment easy and efficient.

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Types of Collateral-free Loans for Business

The following are some types of collateral-free loans available to businesses:

  • Unsecured Business Loans

These loans are based solely on the borrower’s credit score and repayment history. Lenders do not require any security, making them suitable for businesses with a strong financial record.

  • Business Credit Cards

These cards operate similarly to personal credit cards. They enable businesses to manage expenses, settle payments, and maintain cash flow with flexible repayment terms, eliminating the requirement of a collateral.

  • Invoice Financing

This option allows businesses to raise funds based on outstanding customer invoices. It offers a fast route to working capital without requiring asset pledging.

  • Merchant Cash Advance

This type of funding is linked to daily credit card sales. It provides quick access to capital without the need for collateral, making it ideal for retail and service-oriented businesses.

  • Micro Loans

These are small-ticket loans designed for businesses with a limited credit profile. They are generally offered through government or nonprofit programmes to encourage startups and micro-enterprises.

  • Personal Loans for Business Use

Some banks permit the use of personal loans for business-related purposes. These loans do not involve security and offer flexible utilisation across business needs.

Collateral-free Business Loan Interest Rates

Business loans without collateral come with flexible interest rates. These rates vary depending on factors such as the borrower’s credit score, loan amount, and repayment tenure. Below are the interest rates for business loans offered by various partner banks and NBFCs on Bajaj Markets:

Disclaimer: The above-mentioned information is subject to change as per changes in the lenders’ policies.

Eligibility Criteria for Collateral-free Loans

Here are the eligibility criteria to get business loans without collateral for MSMEs and other businesses.

  • Citizenship: Indian citizenship is compulsory to be eligible for a collateral-free business loan

  • Employment: You must be self-employed with your business being registered as a partnership, limited liability partnership, or private limited company

  • Credit Score: The credit score requirements vary with the lender, but a credit score of 750 or more is considered decent

  • Age Limit: Most lenders only give loans to people between 21-60 years of age

  • Business History: Some lenders require the business to have a minimum history of 1 year 

  • Business Turnover: Your business turnover must be at least ₹1.5 Lakhs as per ITR

Documents Required to Get Collateral-free Loan

Here are the documents that you need to submit to get collateral-free loans for new businesses and others.

  • Identity Proof and Address Proof:  It is mandatory to submit your Aadhaar card, passport, driving license, voter’s ID, utility bills, or lease agreement as proof of your identity and address

  • PAN Card: All lenders require your Permanent Account Number (PAN) to verify your financial identity 

  • Business Registration Proof: Lenders would also require proof of business registration 

  • Bank Statements: Some lenders may assess your financial stability by checking your bank statements for the past 6 months 

With minimum paperwork, applying and getting approval is easy.

How to Apply for Collateral-free Business Loans?

Below, we have provided simple steps to apply for business loans without collateral.

  • Step 1: Click on ‘APPLY NOW’

  • Step 2: Enter required personal and business details.

  • Step 3: Choose the required loan amount and repayment tenure

  • Step 4: The lender will verify and approve the loan, and post-approval, the amount will be disbursed into your account

Credit Profile Needed for a Collateral-free Loan

Your credit score is a marker of this credibility, as it shows whether a person has a good or bad credit profile to the authorised lenders that the RBI regulates. Based on your score, your loan terms are decided. 

Therefore, if you seek a business loan without collateral, you need to establish your credibility with the lender. Here are a few points that you must remember.

  • You should have a credit score of at least 700

  • You must have relevant experience in business to pay back the loan

  • You are also required to disclose the loan's objective

  • You need to provide proof with the application to purchase any machinery or equipment

FAQs on Collateral-Free Business Loan

What is Collateral-Free Business Loan?

To get a collateral-free business loan, one can become the beneficiary of government-initiated business loan schemes. However, you have to fulfil eligibility parameters and prove the viability of the business.

The documents that you need to submit to get collateral-free loans for MSMEs include passport-size photographs and identity proof. This includes your Aadhaar card, PAN card, etc. You also need to provide business ownership proof documents and other documents specifically requested by the lending institution.

Major Indian banks and NBFCs offer collateral-free loans, such as Bank of Baroda, Axis Bank, ICICI Bank, State Bank of India, HDFC Bank, and SMFG India Credit, among others.

Yes, it is possible to take a business loan without pledging collateral to the lender. These are known as unsecured business loans.

Several schemes offered by banks, NBFCs, and the government provide collateral-free business loans to MSMEs.

The minimum and maximum limits for collateral-free business loans depend on the lender’s terms and the type of loan. You can take a loan starting from ₹12,00 to a maximum of ₹50 Lakhs.

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