A Complete Guide to Collateral-Free Business Loans

Business loans play a vital role in expanding your enterprise and exploring new ventures, given you have a concrete operational plan. So, if you want to increase your capital, opting for a business loan would be a wiser option than exhausting your savings.
Representative Image.
Representative Image.Towfiqu barbhuiya (Unsplash)

By: Chetan Sharma

Business loans play a vital role in expanding your enterprise and exploring new ventures, given you have a concrete operational plan. So, if you want to increase your capital, opting for a business loan would be a wiser option than exhausting your savings.

Moreover, with a collateral-free business loan, you no longer have to worry about pledging your assets. Here is everything you need to know about a no-collateral business loan.

What is a Collateral-Free Business Loan?

A collateral-free business loan or unsecured business loan is a type of credit you can avail without pledging any security. Therefore, you can repay the amount within the tenure at fixed interest rates without worrying about losing any valuable assets.

Why Should You Opt For a Collateral-Free Business Loan?

No-collateral business loan can be the best option for the following reasons:

  • Zero-collateral: It lets you borrow finance without worrying about pledging security.

  • Low-risk: Reduces the risk of losing your valuable assets.

  • Easy documentation: It requires less documentation and relaxed eligibility criteria.

  • Quick-Approval: You can get faster approval with collateral-free business loans. Many institutes also offer instant business loans within 24 hours.

  • Flexibility: You can find many lenders offering extended tenure of repayment.

How to Apply For an Unsecured Business Loan?

To apply for a zero-collateral business loan, you need to follow these 4 simple steps:

Step 1: Research Different Lenders

Before you apply for any loan, you must do your homework. There are several financial institutes that offer competitive deals on business loans. Also, make sure to look for lenders offering collateral-free loans.

Step 2: Check Your Eligibility for Unsecured Loans

Before applying, ensure you meet the eligibility requirements for collateral-free loans. Check the eligibility criteria mentioned later.

Step 3: Provide the Necessary Documents

Ensure that you provide all the necessary documents to avoid unnecessary delays and hassle.

Step 4: Complete the Application Form

Next, go to your preferred lender's website and fill up the application. Then simply submit your application and wait for the approval.

If you opt for an instant business loan, you can expect your application to get approved within 24 hours.

What are the Eligibility Criteria for Business Loan without Collateral

Loan applications can be rejected if you do not meet eligibility standards. Therefore, you should check and understand your eligibility well before applying for a no-fuss unsecured business loan.

The eligibility criteria to get approved for a collateral-free business loan are as follows:

  • Nationality: You must have Indian citizenship to obtain an unsecured business loan in India.

  • Employment status: You must be self-employed.

  • Age: The standard age range to get credit approval is between 26 years and 66 years.

  • Proof of business vintage: You must be able to provide the necessary documents showing that your business is at least 3 years old. 

What Documents are Necessary to Avail an Unsecured Business Loan

To get swift approval on your unsecured business loans, you must have the following documents:

  • Permanent Account Number (PAN) card.

  • Identity documents like an Aadhaar card, driver’s license or passport.

  • Your income tax returns for the last 3 years.

  • Your bank statements or other necessary documents depending on the lender.

What are Some Tips To Enhance Your Chances of Getting a Business Loan

If you want to get your loans approved quickly, applying for an instant business loan would be best. There are several financial institutes that offer credit approval within 1 or 2 days.

However, there are a few things you can consider to ensure being approved for a collateral-free business loan.

Here are a few tips you can apply to increase your loan approval chances:

  • Evaluate Your Credit History and Maintain a Good Business Credit Score

Your business credit score will decide your repayment capability and chances of defaulting. Therefore, maintaining a good credit score, preferably above 750, is recommended to get your business loan approved without hassle.

  • Have a Concrete Business Plan and Reason for Seeking a Loan

Make sure you plan how to use the fund for your business. For example, funds can be required to purchase equipment, acquisitions, labour cost, etc. Therefore, having a concrete and relevant reason to opt for a business credit will increase approval chances.

  • Choose An Appropriate Lender That Fits Your Plan

There are numerous lenders that offer collateral-free business loans. These lenders offer different facilities for their customers. Therefore, it is important that you choose a lender as per your requirements and preferred tenure. 

  • Make Sure Your Company Has an Online Presence:

An online presence also adds more credibility to your business and you as a borrower. Therefore, do not forget to review your online presence before seeking a business loan.

With efficient homework and the right lenders, opting for an instant business loan today can be easy and quick. Moreover, a collateral-free business loan reduces the risk of losing your security and helps you achieve your business goals with no added burden. 

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