An unsecured loan for business is simply a business loan without collateral – meaning that the lender advances funds without getting any security or asset (like property, gold, or vehicle). A collateral free loan for new business is what helps businesses get started, as it provides the funds for the working capital, equipment, furniture, décor, marketing, paying salaries, leasing premises, digitizing the business, and so on.
Advantages and disadvantages of unsecured business loan
Understanding the meaning and working of
• No need to put any asset on the line for obtaining this loan.
• You may require a personal guarantee.
• Use the loan to meet numerous business needs.
Pros of small Unsecured Business Loans
• Due to minimal paperwork and lack of security, you get quick
• It does not require you to pledge any asset as collateral.
• Paying EMIs on time helps build your credit history.
No role of Loan to Value Ratio
• The loan amount is determined by your business's profile, not
• It comes with flexible repayment tenure.
Cons of small Unsecured Business Loans
• Interest rates are slightly higher than secured loans.
• To obtain this loan, you need a strong credit history.
• Specific business documents are required.
Factors to keep in mind while availing an
• It is easily processed and quickly disbursed.
• It offers flexibility but has a shorter repayment tenure.
• Loan amount can range from Rs 5 to 25 lakhs.
Looking to inject capital into your small
business or start-up? An Unsecured Business
Loan is best for you.
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Know more: Business Loan without Collateral: What are the Pros and Cons