Collateral-Free Business Loan

Q: How can one get a Collateral-Free Loan?

To get collateral-free loans for business, one can become the beneficiary of government-initiated business loan schemes. One has to fulfil eligibility parameters and prove the viability of the business.

Looking for a loan for business without security? Get collateral-free business loan up to ₹50 Lakhs on flexible repayment terms.

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✓Minimal Documentation ✓Flexible Repayment ✓Collateral Free Loan | Apply for Business Loan Now! Apply Now

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 asset as a security for the credit.

Who Needs a Collateral-Free 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
Costs for children's education
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
Emergency loans for medical costs paid out of pocket are more than the insurance coverage

Features and Benefits of Collateral-Free Loan

Collateral-Free

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

Minimal Documentation

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

Instant Processing

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

High Value Loans

You can get up to ₹50 Lakhs or more as a loan for starting 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.

Eligibility Criteria for Collateral-Free Loans

Here are the eligibility criteria to avail of a collateral-free business loan for MSMEs and other businesses.

Citizenship: Indian citizenship is compulsory to be eligible for a collateral-free business loan
Employment: Individuals applying for a business loan must be self-employed
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 within 24-70 years of age
Business History: Some lenders require the business to have a minimum history of 3 years

Documents Required to Avail Collateral-Free Loan

Here are the documents that you need to submit to avail of collateral-free loans for startups and other businesses.

Identity Proof and Address Proof: It is mandatory to submit your Aadhaar card/passport/driving licence 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 a business loan without collateral.

Step 1

Click on ‘Apply Now’.
Step 2

Select the appropriate option from the list of preferred loan partners.
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 get 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 the RBI regulates. Based on your score, your loan terms are decided. Therefore, if you seek a 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 also required to disclose the loan's objective
You need to provide proof with the application to purchase any machinery or equipment

What is Collateral-Free Business Loan?

Collateral is a tangible asset or property that is kept as a security against the loan amount. When you take a loan for starting new business without security or collateral, lenders sanction the loan amount without an asset as a guarantee.

How can one get a Collateral-Free Loan?

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

What are the documents I require to avail of a collateral-free loan?

The documents that you need to submit to avail of a collateral-free loan for MSMEs include passport-size photographs, and identity proof. This includes the owner’s Aadhaar card, PAN card, etc. You also need to provide business ownership proof documents and other documents specifically requested by the lending institution.

Which banks provide collateral-free loans?

Major Indian banks offer collateral-free loans, such as Bank of Baroda, Axis Bank, UCO Bank, Fullerton India, State Bank of India, HDFC Bank, and State Bank of Hyderabad, among others.