8 Reasons Why Unsecured Business Loan Helps Small Business Grow Faster
05 Jul 2019
Earlier, there were not many options available for businesses other than personal loans. Business loans used to be secured in nature, requiring the borrower to provide collateral as a form of security against the loan amount. However, owing to the increasing number of start-ups and evolvement of several businesses, lenders are offering the facility for unsecured business loans to cash-in on the increased demand. However, unsecured business loans have comparatively higher interest rates than the traditional loans. This is one of the key reasons why several businesses are not too keen on applying for an unsecured loan. However, not many people know that the pros of availing an unsecured business loan outweigh its cons.
Discussed below are 7 reasons why you must choose an unsecured business loan for new business-
As the name itself suggest, these business loans are ‘unsecured’ in nature. You do not have to provide collateral against taking credit. This feature is especially beneficial for those businesses that are just starting up and do not have any material asset to give as a collateral. Thus, availing unsecured business finance becomes much more feasible for small business owners or entrepreneurs that are just starting their business ventures.
Easy application process
Most loan providers have made it easy for borrowers to avail a business loan. Now you can apply for an unsecured business loan on the websites of these loan providers while sitting in the comforts of your home or office. These websites are extremely user-friendly and have online guides to instruct the borrower on how to apply for the business loan. These websites also display various features and offers on their business loans. A borrower can browse through the various business loans options available online and choose what best suits his/her business needs.
Applying for an unsecured business loan requires minimal documentation. Primarily, a borrower only needs to submit scanned copies of his identity proof, address proof, SPDC and a canceled cheque. However, some loan providers might also ask for certification of business existence, bank account statements and relevant financial documents to check your business vintage.
Fast amount disbursal
The online application makes it easy to process any business loan application. If the borrower meets all the eligibility criteria laid down by the business loan provider, the loan application could be processed much faster and the amount would get instantly sanctioned. For instance, you can get your business loan approved with the Bajaj Finserv Business Loan facility within 3 minutes and get the amount credited in your account within 24 hours.
Shorter Loan Tenure & Flexible Repayment Options
Most loan providers grant an unsecured business loan as short-term credit. Typically, the range of tenure for an unsecured loan extends between 12 to 60 months. This gives a breather to the business owners from paying long-term EMIs for loan repayment. The shorter loan tenure also makes it easy for the borrowers to keep their cash flow position positive. Nowadays, many business loan providers offer flexible loan repayment options to make the repayment process of much more easier. At Finserv Markets, you can have a complete control on how you want to repay your amount. You can log in on the customer portal of Finserv Markets website and choose a flexible payment mode as per your convenience from the multiple repayment options available. Some of these flexible repayment options include making early prepayments, part-payments, or POS-based loan repayment through daily installments.
No shared ownership
Several businesses go to venture capitalists or angel investors to raise funds for their businesses. However, convincing these people to invest in any business venture is a huge task. Approaching these venture capitalists without a full-proof business plan can often lead to rejection. In comparison, approaching a bank or a non-banking financial company is a lot easier. Also, a lot of angel investors ask for a share in the company’s profits in return for their investments. Many times, the company owners lose the sole ownership of the company in the process of availing funds without incurring any debt. However, when you apply for a business loan, you do not have to worry about losing or sharing your ownership. Whatever profit a business owner makes by utilizing the business loan is solely for the business owner to enjoy. The owner need not share any part of his/her business profit with the loan provider.
Eligibility Criteria for an Unsecured Business Loan
Although the eligibility criteria for an unsecured business loan may vary for different providers, the basics remain the same. For instance, if you wish to apply for a Bajaj Finserv Business Loan, you have to fulfill the following criteria-
The business must be based in India.
The borrower should be within the age group of 22-55 years.
The business vintage should be 3 years or more.
Your business should have filed for income tax returns in the past 1 year.
Provide working capital
In order for any small business to operate with ease, the working capital is required as SMEs need to keep up a customary income inferable. Unbound business advances can empower small businesses to meet necessities like overseeing creditor liabilities, service charges, regular deals, and other such routine costs. Private company advances can go about as a money pad when the negative income becomes a risk. Along these lines, small businesses can work on long haul development without agonizing over momentary liquidity.
The benefit of competitive interest rates
Besides the various innovative services offered through technology, FinTech companies offer unsecured loans at competitive & affordable interest rates. On the same hand services offered are thoroughly professional and you also get flexibility in terms of repayment of unsecured loans. This helps the business to grow and focus more on achieving growth. Unsecured small business loans are also provided depending on the capacity to grow and make a profit. But flexibility is always there in terms of loan approval without the requirement to pledge assets as collateral. Unsecured loans have the capacity to bring growth for the small scale industries to fulfill the needs of small businesses in every sector.
Before applying for an unsecured loan, a business owner must take note of factors such as interest rates, prepayment charges, and offer documents submitted for the loan. Make sure you weigh all the pros and cons of a business loan and check if what the business loan provider is offering you is in alignment with your business aspirations. If you are confident about your business’ progress and think that you can afford to pay the high interests, then applying for an unsecured business loan makes sense.
For custom-made business loans with exclusive offerings, visit us at Finserv Markets today. The Bajaj Finserv Business loans come with affordable interest rates and can be instantly availed online through minimal documentation. Apply today and enjoy unlimited withdrawals as per your business requirement with no additional part-payment or pre-payment charges. For more details, visit now!
Finserv Markets, from the house of Bajaj Finserv is an exclusive online supermarket for all your personal and financial needs. Loans, Insurance, Investment and exclusive EMI store, all under one roof- anytime, anywhere!