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Unsecured Business Loan - Process, Application and Interest Rate
Earlier, small and medium-sized businesses used to apply for business loans that were secured in nature. These types of loans required the applicant to submit the collateral as security to get loans from banks and financial institutions. But, considering the growing number of start-ups and new businesses, now lenders have started providing businesses the facility to avail of unsecured business loans. An unsecured business loan is solely based on the credit score and history of the borrower. The banks consider the applicant’s proceeds, financial documents, etc., rather than asking for collateral. Small business owners can apply for this loan for diverse reasons, including equipment purchase, business expansion, cash flow management, inventory, etc. Most lenders provide flexibility on MSME (Micro, Small, and Medium Enterprises) loans for start-up businesses in terms of repayment tenure, interest rate, and loan amount. Here is everything to know about an unsecured business loan, the application process, interest rates, etc.
You can apply for this corporate loan through the website of the bank, right from the comfort of your home.
You can also visit the bank personally and request an application form. An authorized representative from the bank will assist you with the options that may best fit your requirements.
Once the eligibility verification process is complete, you can submit the form and relevant document to the bank authorities for verification.
If everything goes well about your application and documents, your loan application gets approved.
Following the completion of the loan agreement, the amount will be dispersed to the applicant's account within a few hours or days.
Eligibility Criteria for Unsecured Business Loan
To apply for an MSME loan, one must meet the eligibility criteria specified by their selected lender. The eligibility criteria and terms and conditions may differ from bank to bank. The general eligibility criteria to apply for this unsecured business loan are:
MSME Loan for Start-up Business – Document Required
You only need to submit the following documents to get a corporate loan for your business.
Application form filled with correct information
Bank statements and ITR documents
A detailed, self-drafted business plan
KYC documents such as PAN card / AADHAR Card / Utility Bills / Rent or lease agreement / Passport / Ration card, etc.
Benefits of MSME Loan for Start-up Business
MSME loans are related to unsecured business loans offered by several banks at good interest rates to help individuals, MSMEs, and other business entities fulfil various business-related expenses. Mentioned below are some key benefits of these unsecured business loans:
Quick Loan Processing
Since the documentation process is simple and paperwork is minimal, loan disbursement is faster. The quick loan processing time makes unsecured business loans ideal for new businesses that need immediate cash.
No Collateral Required
You do not need to submit any collateral to get the loan approved by the bank. Instead, banks and private lenders evaluate the market opportunities and business plans of the applicant to approve the loan amount.
Since no assets or collateral are evaluated to restrict the loan amount, you get the ease to apply for a higher amount with an unsecured working capital loan. However, in the case of secured loans, you will get a limited amount based on the value of your collateral.
With an unsecured business loan for your MSMEs, you can use the loan amount for various purposes. You can make most of the provided funds without restriction – such as purchasing new assets or equipment for the business, starting a new venture, or meeting other business expenses.
So, MSME loans for a start-up business is a great way to secure immediate fund for your business requirements. This kind of unsecured business loan is available at the best interest rates and it can help your startup reach new heights and success.
Muthoot Finance, the most trusted Financial Services Brand in India, provides unsecured small business loans. Visit your nearest Muthoot Finance branch know more and discuss your loan requirements in detail.