Establishing a new business or expanding an existing one requires a substantial amount of capital. This is where a business loan can prove to be extremely handy. India is home to a large number of micro, small and medium scale enterprises (MSMEs). These MSMEs contribute significantly to the growth of the Indian economy. In order to run their business efficiently and maintain steady cash flow, a large number of small business owners resort to availing a business loan. This has increased the popularity of business loans significantly over the years. Therefore, if you are an entrepreneur looking forward to availing funds for your business, you may consider availing a business loan. There are two types of business loans, i.e. secured business loans and unsecured business loans.
Secured business loans are the ones that are pledged against collateral. You will have to pledge your valuable assets while availing the loan amount. Therefore, if you happen to default on your business loan, the lending institution may seize your valuable assets to make up the losses incurred. Thus, it is essential to evaluate your repayment capacity carefully before opting for a secured business loan.
Unsecured business loans do not require any collateral. This keeps your assets safe in case you fail to make timely repayment of the loan amount. With the help of leading financial institutions, it is possible to avail online unsecured business loans in a hassle-free manner.
Let us have a look at some of the other features of unsecured business loan that make it a preferred source of financing for small businesses:
In case of unsecured business loans, the lender approves your loan application based on your promise to repay it within the stipulated time frame. Since the risk associated with an unsecured loan is comparatively higher, financial institutions usually charge a comparatively higher interest rate on it. Therefore, you must compare various business loan offers provided by different financial institutions before making the final decision. It is recommended to settle for a business loan with an attractive interest rate. This will reduce the overall cost of borrowing in the long run.
Before approving your business loan application, lenders may check your credit score. A high credit score can not only increase the chances of your business loan approval but also help you avail a higher loan amount at a reduced interest rate. Therefore, it is advisable that you must boost your credit score before applying for a small business loan. On the other hand, if you avail a business loan and make its timely repayment, you can improve your credit score gradually over a period of time.
Unsecured business loans have more flexible terms as compared to traditional loans. Leading financial institutions offer unsecured business loans with a Flexi loan facility. This facility allows you to borrow the loan amount without utilizing the whole loan facility. The interest will be charged only on the borrowed amount. You can also make part repayments without any penalty.
Since no collateral is required while availing an unsecured loan, a lot of time is saved on authentication and evaluation of collateral. Therefore, the loan amount is disbursed within a short span of time.
Minimal documentation is yet another advantage of availing an unsecured business loan. Moreover, with leading financial institutions, you can submit all the required documents online and get your loan approved within a short span of time.
An unsecured business loan can help you take your business to greater heights. Therefore it is one of the most reliable credit products for entrepreneurs who wish to expand their business. While availing a business loan, you must always calculate the EMI beforehand with the help of an online EMI calculator. This will help you manage your monthly budget wisely, thereby allowing you to make timely repayment of your business loan.
While availing a business loan, you must also compare the processing fees, prepayment charges, etc. Business loans of up to 30 lakhs available at Bajaj Markets have no hidden charges. Minimal documentation, instant approval and quick disbursal of the loan amount are some of the major benefits of business loans available at Bajaj Markets. Moreover, you can also customize your loan according to your requirements.
It is advisable to check your business loan eligibility before applying for a business loan with a specific lender. This can reduce your chances of rejection of your business loan application. Business loans available at Bajaj Markets have simple eligibility criteria. They are mentioned as below:
You must be an Indian citizen
You must be self-employed
You must be between 26-66 years of age
You must have 3 years old business
Since a business loan rejection can hamper your credit score, calculating the eligibility beforehand with the help of an online business loan calculator would be a wise decision.
After availing a business loan, make sure that you use the loan amount wisely. Some of the most common uses of the business loan are to manage daily expenses, purchasing equipment, and inventory, hiring employees, etc. As a business flourishes, mergers and acquisitions are bound to happen for many firms. This would require a substantial amount of investment and funding. Business loans can also be helpful in such cases. In addition to that, relocating a business to a newer or bigger location or investing in a new product line would require a large amount. This is where a working capital loan can be extremely useful. Entrepreneurs can also use the loan amount to expand the online sales campaign, or for marketing and advertising budgets.
Knowing all these possible ways to use a business loan can help the business owners make a wise decisions for the betterment of their business. Lastly, make sure that you read all the terms and conditions of your business loan agreement carefully before signing it. This will help you avoid any inconvenience in the later stage.
Also read what are the benefits of taking a business loan only at Bajaj Markets.