When you decide to run your own business after quitting your job is one of the most incredible feelings you can ever experience in your life. As you are no longer confined to a 9 to 5 routine or at any mercy of your manager.
When you have your own business, you also get a lot of flexibility. You get to decide your working hours, you will earn as hard as you work, you will be answerable to anyone, and you are free to do things as you want.
But to get everything started for your business is not a simple process. You will need to arrange for a source of finance to fund your dreams. However, if you have adequate savings in your account, you can utilize them to get your business started.
When your investment gets absorbed in your business after a point in time, your payments will get delayed. However, you will have to explore an alternate source of finance. Although, there are some options where you can get the money required instead of a stake in your business.
It is still not a desirable option because you will lose the independence to do things your way. It will be answerable to the other partners for every action of yours. However, in this situation, the best option for you to access the requisite funds to avail of an unsecured business loan.
Several financial institutions are operating in India that also offer MSME loans to small business owners in need.
Where can you avail of an unsecured business loan from?
Three major financial institutions operate in India such as banks, NBFCs and online lending companies. The above three options online leading companies offer the maximum flexibility and convenience while you avail of MSME loans.
However, online lending companies can conduct the entire process for a business loan approval through their website. You don’t need to make endless visits to any branch office of a bank. All you need to do is access their site on a computer, or you can also download their app on your smartphone.
You should also follow the process specified online that would require you to provide the necessary KYC information along with the PDFs of the needed financial documents. They also follow an independent credit evaluation process and CIBIL to get a holistic view of your financial position and increase the chances of your business loan application being approved.
And suppose your business has a gross annual turnover of more than Rs.10 lakhs. You can also avail of an unsecured business loan of up to Rs.7.5 lakhs from a leading online company. It with help you to get from a leading online company that you can repay the amount in a maximum period of 24 months. You are also free to utilise the money at your discretion. You do not need to inform the lender regarding the end usage of the money.
Things to avoid while getting an unsecured business loan:
When you are preparing for an application regarding an unsecured business loan. It is also essential for you to follow these tips to help your application be successful in the first instance itself.
However, certain things to keep in mind will help you avail of collateral-free business loans, before getting an unsecured business loan.
- Not checking credit score
- Not checking bank statements
- Not preparing financial documents
- Now knowing your requirements
- No knowledge of loan products
Not checking credit score: You should know that your CIBIL score is an essential factor that affects your eligibility for a business loan. Some errors might have crept into your CIBIL report. However, before you apply for a business loan, you can make it a point to check out your credit report and also raise disputes regarding any such errors.
Not checking bank statements: In this, your last one-year bank statement(current and savings account) should have a healthy balance. It should be without any debts on account of balance non-maintenance charges. You can also ensure there are no instances of cheque or an EMI bounce.
Not preparing financial documents: You must know that your lender will assess your eligibility for a business loan based on your financial documents. You should also keep all documents that the lenders specify are readily available. However, if possible, you can scan them and keep the PDFs on your email for ready access.
Now knowing your requirements: You should only apply for only as much as you require. The money you are going to borrow carries an interest cost, so you should also borrow only as much as required. Although, always ensure that your eligibility is higher than the amount that you have applied for.
No knowledge of loan products: There are also various lenders who
are offering different business loan products. So, you should also conduct thorough research regarding the various business loan offers available. You can also select the one that meets your requirements in the best possible manner. It will enhance the chances of your application being approved in the first instance itself.
You can also avail of an unsecured business loan that would be convenient and effortless for you best suitable. You can also avoid all the points mentioned above and prepare your MSME loan application accordingly.
Conclusion:
When it comes to unsecured business loans, it is a type of funding that is offered without the applicant trying to provide any kind of collateral to the bank. Unsecured business loans are offered based on an applicant’s financial documents, income, credit score. However, most businesses prefer unsecured business loans as they don’t have to pledge to their assets as security. When you look from the borrower’s perspective selecting unsecured business loans are considered much safer and secured when compared to secured business loans.
