Gold Loan for Small Businesses with Affordable Financing

For budding entrepreneurs, getting the right financing to kick start their business or to meet urgent short-term business needs can pose quite a challenge in the starting years. In such situations, a gold loan might just be the solution that you need.

Table of Content

• How Can a Gold Loan Help?
• Advantages Of Availing a Gold Loan

How Can a Gold Loan Help?

There are several reasons why you should consider opting for a gold loan for your business.

Immediate Access to Funds

One of the biggest advantages of availing a gold loan is that the loan amount is disbursed instantly, unlike other types of financial solutions that generally involve lengthy application and verification processes before you get approval for the loan. This makes gold loans one of the best options for meeting urgent business needs.

Collateral-Based Loan

Gold loans are secured loans that are sanctioned based on the value of the gold that you pledge. Secured loans translate into lower risks of default for the lending institution, which allows them to offer more favourable loan terms, flexible repayment options, lower interest rates, and much more to borrowers. A gold loan allows easy access to the funds you need for your business, and you don’t even have to compromise the ownership of the gold that is being pledged.

Guaranteed Safety of Your Gold

For the duration of the gold loan, you can rest assured that your assets will be safe. The gold that you pledge is safely stored with the lender in secured rooms with 24/7 CCTV coverage. Several lenders also offer insurance coverage for the gold against risks like fire, natural calamities, burglary, etc.

High Loan Amounts

The maximum amount of money that you can avail under a gold loan for your business depends on the value of the gold being pledged. For this loan, the rate of gold today, the weight of the pledged gold, and its purity are taken into consideration. According to RBI, borrowers can avail up to 90% of the value of the pledged gold as a loan. Using an online loan calculator, you can make an informed decision. This is because instead of calculating EMI, the gold loan calculator actually allows you to get a better idea about how much gold you need to pledge or how much your gold can fetch you. Here’s more on the gold loan calculator:

The Gold Loan Calculator: Not for EMI

As mentioned, this tool is not used for calculating an estimated EMI. The gold loan calculator actually has two functions. You can use it to get an idea of the maximum amount of money you will be able to avail as a loan against specific gold pieces or jewellery, by entering the weight and purity of the gold. The other use of the gold loan calculator is for people who have a particular amount in mind that they want to avail, and using the calculator, they can get an idea of how much gold they need to pledge to avail that amount as a gold loan.

Advantages Of Availing a Gold Loan

Simple Processes

Applying for a gold loan is extremely convenient and involves minimal documentation. All you need is identity and residence proof, and of course, the gold that you plan to pledge as security. These days, there are multiple financial institutions that offer online application processes for gold loans. Some lenders also have doorstep gold loan services in place for added convenience in getting a gold loan for a business.

Suggested Read: How does the Gold Loan Process Work?

Low Interest Rates

Another reason to finance your business using a gold loan is the low interest rates that you can avail. Gold loans are secured loans, which translates to reduced risks for the lender. So, many lenders are happy to offer lower interest rates when you apply for a gold loan. It’s always a good idea to put in some research to find the best deals on gold loans from reputed financial institutions.

Suggested Read: Finding the Best Gold Loan Interest Rates in 2024

No Credit Score Requirements

Most loans have a minimum credit score requirement that a borrower is supposed to meet. Generally, borrowers should have a CIBIL score of 750 or more to qualify. Additionally, other loan instruments also look for a good credit history for an individual as well as a business. A gold loan on the other hand has no such requirements. The loan is disbursed on the basis of the gold pledged as security and a gold loan has no effect on the borrower’s credit score or history either.

Suggested Read: Is A Good Cibil Score Required For A Gold Loan?

Does Gold Loan Affect Your Cibil Credit Score?

Flexible Repayment Options

In general, borrowers can choose a repayment tenure from various options, ranging from 7 days to 12 months or more. At the end of the loan tenure, they will be required to make a lump sum payment of the loan amount and the applicable interest to the lender. Other repayment options include making monthly interest payments throughout the tenure and repaying the principal amount as the tenure ends. You can also opt for a more flexible repayment option where you make partial pre-payments throughout the tenure, as and when, towards paying off the loan amount as well as the interest, based on your financial situation.

Suggested Read: Gold Loan Repayment Strategies with Maximizing Benefits

It is easy to see that financing the requirements and short-term needs of your business with a gold loan can prove to be a highly beneficial decision. So, why delay entrepreneurial ambitions? Apply for a low interest rate gold loan, today!