In India, the industry of start-ups is snowballing. As a result, the companies continue to inflate millions of dollars in funding. Looking at records, we can notice start-ups companies possibly expand swiftly at a 5% to 7% rate in the initial stage in upcoming years. With the elevating chance of success, we can look at whether they can avail of unsecured business loans to backup their fund requirements. Additionally, we will scrutinise the unsecured business loan eligibility parameter for start-up companies to apply for the loan.
Why do start-ups require unsecured business financing?
As we understand, a small business effort goes beyond the range of experience or concept of traditional companies. Established ventures have been in the business for a pretty long period of time. On the other hand, start-ups just stepped their foot into the market region.
These technology-oriented, advanced start-ups display high potentiality of growth and success. Yet, they lack adequate funding. Such a situation in India leads start-up owners to consider unsecured business loans.
This blog will point out what an unsecured business loan is, how it works, how you can apply it, eligibility criteria, and others in detail. So, let’s explore!
Unsecured Business Loan: An Overview
Whether a small, medium or large business, a company desperately needs working capital to operate business activities smoothly. The working capital is a significant part of a company that helps in sustainable development. However, many businesses often fail to strengthen strategies and planning for finance in their routine operations. Hence, they find their efforts on the ground of financial crisis.
Unsecured business finance can bet goodness for businesses no matter you want to start an idea, reconstruct an existing one or try to expand or develop it. A business loan has an immeasurable impact on businesses to fulfil working capital requirements. An entrepreneur can instantly boost existing enterprise cash flow, shop new instruments and machinery and much more.
What’s more interesting? The unsecured business loan does not demand pledging collateral since it can place you in more distress. Besides, you would not want to embed your assets at stake for some short-term business loans.
Unsecured business loan eligibility criteria:
The eligibility criteria are almost the same for every lending company. To become qualified for the unsecured business loan, you have to match the following parameters:
- Applicant’s age must be within 21-65 years.
- Should have Income Tax Return (minimum 1year)
- Should own a running business operated for last 3years
- Active financial records (bank statement) for the previous 1year
- Previous year turnover precisely audited by a CA
- Other essential documents linked to business establishment required at the time of verification
Benefits of getting unsecured business loans:
An unsecured business loan is a positive alternative for business owners with no spare capital to spend for business. Anyone with a 1year old company can avail of this finance solution effortlessly. Most importantly, a borrower does not need to secure any collateral in exchange for this loan. However, here are other impressive benefits that come along with unsecured business loans:
· No credit scores:
Business owners with less credit or even minus credit can appeal for an unsecured business loan. Under this scheme, your credit does not count. Your business profile will represent your qualification. If you own a powerful business concept, you are more likely to get your loan approved.
· No collateral:
For secured loans, the lender demands collateral from borrowers for loan security purposes. But, if you jump into an unsecured business loan, the lender cannot require or seize your assets as collateral. They have to consider court for legal actions.
· Flexible payment options:
We all know, a borrower needs to repay the principal amount total with interest rates. But in an unsecured business loan, the payment structure will depend on the profits your business make. It means lenders offer flexibility in repayment procedures that might adjust following your business and profits.
· Unlimited Funding opportunity:
Whether your business grows or needs extra funding, you can always apply for more cash support as long as you maintain excellent standings.
Several lenders in India have designed the unsecured business loan policy to help businesses during harsh times. Regardless of the industry type, nearly every establishment (should be 1+ years old) can qualify for this loan. Before that, a business owner can browse unsecured business loan eligibility details to make the procedure much more horizontal.