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

A collateral-free business loan helps provide the working capital that can be used for purchasing machinery, hiring staff, or expanding your business without pledging any asset as a security against the credit. However, due to the implied lack of penalty for default, it must be noted that a loan defaulter would still face legal actions from the lender and also be subjected to a drop in their credit rating. This is true for those who take such loans without applying for government schemes and, thus, have no guarantor in case of default.

Features and Benefits of Collateral-Free Loan

  • Collateral-Free: Unlike traditional business loans, it is no longer mandatory to pledge any asset such as real estate or machinery as a security to avail credit facilities.

  • Minimal Documentation: Collateral-free loans can be availed online with minimal documentation. The documents required would pertain to KYC, identity, address and business proofs.

  • Instant Processing: The absence of the collateral requirement has led to quicker and simpler loan processing. For example, suppose you opt for the collateral-free business loan available on Bajaj Markets, then your application would ideally be processed within 2 minutes, and your loan amount will be disbursed within 24 hours, subject to approval!

  • High Value Loans: With collateral-free business loans, one can avail of a loan of upto ₹75 Lakhs or more depending on the nature of the business.

  • Competitive and Flexible Interest Rates: Compared to other premium loan services, collateral-free business loans are offered at competitive rates, thus allowing borrowers to achieve their financial and commercial goals without the burden of high interest.

  • Flexible Repayment Options: Various lenders have different schemes and offers when it comes to loan repayment. The flexible repayment options let you make your repayments as per your financial standing. Depending upon your income, you can choose to make smaller or bigger payments towards fulfilling your loan.

  • Online Account Management: Most lenders now offer loan management services through a dedicated online portal, which greatly eases the administrative and management process.

Eligibility Criteria for Collateral-Free Loans

  • Citizenship Criteria: 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 at which your loan would get approved varies with the lender, amount, and tenor. However, a credit score of 700 or more is considered to be decent.

  • Age Limit: Most lenders only give loans to people falling within a specific age bracket. It is usually between 25-66 years of age.

  • Business History: Some lenders require the business to have a minimum functioning history of around 3 years.

Collateral-Free Business Loans Interest Rates and Charges

Interest Rate

18% onwards

Processing Fees

Upto 3% (one-time)

Convenience Fees

Convenience fee on Bajaj Markets is as low as ₹4,499.

Bounce Charges

Bounce charges refer to the penalty applied if the payment bounces. At Bajaj Markets, bounce charges are as low as ₹3,000.

Penal Interest

2% of the overdue EMI

 

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 the ‘Business Loan’ tab listed on the home page.

  • Step 2- Select the appropriate option from the list of preferred loan partners.

  • Step 3 - Choose the required loan amount and repayment tenor.

  • Step 4 - Next, upload copies of all the relevant documents.

  • Step 5 - Finally, you must submit your application. The lender will verify and approve your loan that is disbursed into your account.

Documents Required to Avail Collateral Free Loan

  • 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 the 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 of the past 6 months.

So, what are you waiting for? Apply Now on Bajaj Markets

Government Initiated Loan Schemes for Startups in India – October 2022

The government of India has initiated certain loan schemes to encourage Startups in India in October 2022 -

1. MUDRA Loan

The Micro Units Development and Refinance Agency (MUDRA) is a loan scheme launched with the aim to ‘Fund the Unfunded’ without any collateral or guarantee. The loan scheme offers financial assistance to small and micro-level businesses at reasonable interest rates. The Startups and small businesses are categorised into three categories by the MUDRA loan scheme -

  • Shishu - Mudra offers Rs. 50,000 financial assistance to the initial stage of the Startups and businesses under this category.

  • Kishore - This category is defined by evaluating various factors like growth, turnover, and scope of the business and the beneficiary is offered fund assistance of Rs. 50,000 to Rs. 5 lakhs

  • Tarun - A financial assistance of up to Rs. 10 lakhs is offered under this category after evaluating the requirement of the businesses.

2. Stand-Up India Loan

To encourage and empower women entrepreneurs of the Scheduled Tribes and Castes, the government is offering Rs. 10 Lakhs - Rs. 1 Crore loans to the women for setting up their startups or businesses in trading, manufacturing, or any other industry. The Stand-Up India loan scheme is available for a tenure of 7 years with flexible repayment options.

3. CGTMSE Loan

The government of India has launched the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) loan scheme in collaboration with public banks, foreign banks, certain rural regional banks, etc. to render financial assistance of up to Rs. 1 Cr. to Startups as well as existing businesses. To avail of the benefit of this collateral-free loan scheme, a business unit has to fulfil certain eligibility parameters and prove its viability.

4. Credit Facilitation

NSIC (National Small Industries Corporation) offers credit facilities from banks to registered Micro, Small and Medium enterprises by analysing their turnover and profit ratio. This scheme is generally offered for a tenure of 5-7 years, in exceptional cases, it can be extended up to 11 years.

5. Market Development Assistance Loan Scheme

This scheme is launched to promote Micro, Small and Medium enterprises (MSMEs) for international exposure in trade fairs, exhibitions, etc. The scheme offers funding for -

  • SMEs participation in international trade fairs and exhibitions of manufacturing industries

  • 75% reimbursement of the registration fee

  • SMEs are given 75% reimbursement of the annual fee paid to the GSI for the first three years

  • Participating for anti-dumping cases

FAQs on Collateral Free Business Loan

✔️What is Collateral-Free Business Loan?

Collateral is referred to as a tangible asset or property that is kept as a security against the loan amount. In collateral-free business loans, banks sanction the business loan amount without keeping an asset or property as a security or guarantee against the loan.

✔️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.

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

The documents required to avail of a collateral-free loan are -

  • Passport -size photographs

  • Identity Proof like Aadhar card, PAN card, etc.

  • Business registration proof

  • Documents that are specifically asked by the lending institution

✔️Can I get the whole amount I apply for?

The banks or lending institutions generally aim to sanction the requested loan amount to the lender, however, any error or discrepancy in the information provided by the error might reduce the sanctioned loan amount.