What are the Interest Rate and Eligibility criteria for Loan for Business Without Security?

A loan for business without security also known as an unsecured business loan is a type of loan where you can get funds without any collateral. This loan has many benefits and comes at an affordable interest rate. This loan is granted to the company depending on its financial soundness and credibility. If you have enough financial goodwill and a decent credit score then there is nothing better than an unsecured business loan.

Unsecured business loans typically involve minimal paperwork, bypass the evaluation procedure for any security, and so have a faster approval process. Many thoughts concerning unsecured company loans may be racing through your mind right now. As a result, we’ve dedicated this page to answer all of your concerns about the unsecured business loan online application procedure, eligibility criteria, interest rates, and required documents.

What are the Interest Rates on an Unsecured Business Loan?

The rate of interest on an unsecured business loan in India varies from one financial institution to another. There are several reasons why this happens. The factors that generally affect your rate of interest are as follows:

  • Monthly Income: If you have a stable monthly income, your interest rate will be low since your stable income will be proof that you will be able to return the borrowed funds.
  • Credit Score: Your credit score plays a very important role while processing your loan. If you have an excellent credit score you can negotiate for a low-interest rate.
  • Loan amount: The amount of your loan and interest rate has a direct relationship. The smaller the amount of the loan, the lower is your rate of interest.
  • Relationship with lender and borrower: If the borrower and the lender get along well because of a good payback history, you can get a reduced interest rate.
  • Term of Loan: In an unsecured business loan a lengthy tenure will result in a higher interest rate.

What are the Eligibility Criteria for an Unsecured Business Loan?

It’s very important to have a look at the eligibility criteria for aloan for business without security before you apply for it. Because each lender has a different set of qualifications, you should visit the lender’s website and see them for yourself. Here is a list of a few qualification requirements:

  • You must be a citizen of India and fall within the age restrictions imposed by the lender.
  • Professionals such as doctors, accountants, architects and self-employed individuals like traders, manufacturers, and retailers can apply for this loan.\
  • Business entities like private limited companies, trusts, limited liability partnerships and partnership firms can also apply for this loan.
  • If you are a small or medium-sized business owner you should have been in the existence for at least five years.
  • You will be eligible for a repayment tenure of up to three years. The tenure can vary depending on your profile.

What are the Documents Required for a Business Loan Without Security?

For a smooth application procedure, you must have all the relevant supporting documents ready with you. This documentation will help you with fast and hassle-free approval. The documents will differ from one lender to another. Some of the more frequent papers required are as follows.

  • All operational accounts’ bank statements of up to the last six months
  • Recent audit records
  • GST Returns for the Fiscal Year
  • List of directors or the most recent six-month bank statement.
  • Self-attested KYC documents
  • Current term loan/working capital facilities self-declaration

How to Apply for an Unsecured Business Loan Online?

Now that you know about the necessary documents and eligibility criteria for an unsecured business loan. Let’s move forward with the application procedure for an unsecured business loan online. This is the most convenient method for applying for a business loan. It saves you time and helps in the easy approval process. Here’s how you start with the online application process:

  • Go to the business loan application page on the website of your lender.
  • Check the website’s unsecured business loan eligibility criteria and all the documents’ related information.
  • Fill up the loan application form and submit a softcopy of the appropriate papers whenever needed.
  • Choose your loan amount and repayment tenure for your unsecured business loan.
  • If the submitted information matches the lender’s standards, you will get a reference number through phone or email. This number will be helpful for future use.
  • After you have received the reference number, a representative from the lending institution will contact you for gathering further information to move forward with the procedure.
  • Following the validation of your information, the lender will send an email to you regarding a loan offer tailored for you. It will include all the information from the interest rate, and loan amount, to your payback period.
  • Once the verification is over, the lending institution will proceed to deposit your loan amount to your account within the next 48 hours.

It’s a wrap! So that’s all you need to know before applying for an unsecured business loan online. A loan for business without security has proven to be beneficial to many small and medium-sized firms. You can take advantage of this and kick-start your business now!

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