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Collateral-Free Business Loans

India still ranks poor, when it comes to the ease of doing business in the country. But with the rise of entrepreneurial ambitions and government schemes, lenders are now more willing to lend to new entrepreneurs and MSEs. This is evident in the credit growth of the MSME sector over the last 5 years which has grown at a CAGR of 19.3%.

Collateral Free Business Loan

However, business loans typically come with a collateral requirement which can be taxing to many borrowers. Considering the fact, the government launched the MUDRA Yojana and the Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE), both of which name the government as a partial guarantor in a loan. This has led to the emergence of Collateral Free loans.

A collateral-free business loan helps provide the capital that can be used for purchasing machinery, hiring staff or expanding your business without pledging any asset as a security against the credit. Whilst a collateral-free loan sounds strange, due to an implied lack of penalty for default, it must be noted that a loan defaulter would still face legal actions from the lender subject to drops 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 Loans

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

  2. Minimal Documentation: collateral-free loans can be availed online with minimal documentation involving only KYC details, identity proof, address proof, and business details,

  3. Instant Processing: The absence of the collateral requirement has led to quicker and simpler loan processing. For example, if you opt for the Collateral-Free business loans available on the Finserv MARKETS website, your application can be processed within 3 minutes and your loan amount will be disbursed within 24 hours!

  4. High Value Loans: With Collateral-Free business loans one can avail a loan upto 30 lakhs or more depending on the nature of the business.

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

  6. Flexible Repayment Options: Various lenders have different schemes and offer concerning the repayment of loans. The Hybrid-Flexi business loans available on Finserv MARKETS is a great example of the same. It allows you to borrow when you need, and pre-pay when you can, all while paying 45% lesser EMI. You can also take more time to plan your repayment and make necessary provisions for easy repayments.

  7. Online Account Management: Most lenders now offer loan management services through a dedicated online portal which is greatly easing the administrative and management process

Eligibility Criteria for Collateral-Free Business Loans

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

  1. Employment: Individuals applying for a business loan must be self-employed.

  1. Decent Credit Score: The credit score at which your loan would get approved varies with lender, amount and tenure. However, a score of 650 or more is considered to be a decent credit score.

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

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

Documents Required to Avail Collateral-Free Business Loans

Following are the documents required for collateral free business loan:

  1. Identity Proof and Address Proof of the Applicant: It is mandatory to submit your Aadhar card/ Passport/ Driving License as a proof of your identity and address.

  1. Pan Card: All lenders would require your Permanent Account Number (PAN) Card to link all your financial transactions and get KYC details.

  1. Business Registration Proof: Some lenders would also require a proof of the registration of your business.

  1. Bank Statements of the Past 6 Months/ Salary Slips of the Past 3 Months: Some lenders may further check for your financial stability by assessing your bank statements and salary slips.

Collateral Free Business Loans Interest Rates and Charges

  1. Interest Rate: An interest rate is the percentage of principal charged by the lender for the use of its money. For instance, interest rates on Finserv MARKETS start from as low as 18%.

  2. Processing Fees: A processing fee is a one time fee that is charged to cover the costs incurred by the lender on the loan process. Processing fees on Finserv MARKETS are nominal which is only upto 3% of the loan amount.

  3. Convenience Fees: These are the fees charged for paying the payment-processing companies for digital transactions. Convenience fees on Finserv MARKETS are a low Rs. 4,499.

  4. Bounce Charges: Bounce charges refer to the penalty applied in case the payment cheque bounces. At Finserv MARKETS Bounce charges as low as Rs.3000.

  5. Penal Interest: It refers to the penalty applied to the overdue EMI in case of failure to pay on time. It is usually around 2% of the overdue EMI.

Now that you know all the necessary information to get a Collateral Free Business Loan, here’s how to actually apply for one.

  1. Carefully Select a Suitable Lender: Compare online prices and finalise an appropriate lender.

  2. Ensure that you Comply with the Eligibility Criteria: Refer to the eligibility criteria of the lender for a collateral-free business loan.

  3. Check your Credit Report: Determine your creditworthiness by checking your credit score online. You can check your credit score on the Finserv MARKETS website for free.

  4. Compile the List of Documents Required: Collect all the necessary documents required by the specific lender.

  5. Fill the Online Application: Apply online carefully and honestly so that the chances of your loan getting approved increase substantially.

If you are looking for fast and hassle-free business loans then the collateral-free business loans available on Finserv MARKETS are processed quickly and disbursed within 24 hours. They also come with a flexible repayment plan customized according to your needs with an excellent online platform that simplifies the management of your loan.

Happy Customers of Finserv MARKETS

Getting a loan to take care of my wedding and relieving my parents to enjoy the occasion was the best decision I ever made. Easy-to-apply, amazing interest rate and quick disbursal, what more can one ask for!

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