In case you are running a small business and are looking at availing finance without providing collateral to the lenders, then you can take advantage of the many benefits of unsecured business loan, which are given below:
A unsecured loan is one of the excellent sources of cash for your small business as it does not require any collateral or security to be pledged by you to the lender. In case the business does not work out or face problems, you need not worry about losing assets or the business.
Although the qualifying criteria for unsecured business loans are less stringent, lenders may verify whether you have a stable monthly income. You might be asked to provide your financial statements for the last six to twelve months. Further, permanent account number (PAN) or unique identification (UID) number are also required to be furnished. However, it is only you who decides where and how the funds should be allocated or utilised.
A small unsecured business loan is disbursed speedily as the lender does not require many types of documentary evidence. The approval process is simple, streamlined, and convenient. Besides, you can fill in the loan application online, which helps in saving a lot of time and effort. Nowadays, with the adoption of technology, the loan procedure has become completely paperless, facilitating swift turnaround time on unsecured loan applications.
As no asset acts as collateral and limits the loan size, you could even apply for a larger unsecured business loan.Alternatively, if you apply for a secured business loan, you will only get an amount that matches the value of the collateral.
Generally, lenders require that you repay the loan in fixed monthly instalments in a limited timeframe. This can prove challenging sometime. However, an unsecured loan could be a better alternative because these lenders also offer flexible payment solutions.
For small businesses, you could avail of financing arrangements which make money available on a revolving basis, known as unsecured line of credit. These arrangements boost the confidence of the lender as the borrower has to repay the loan consistently. Once the full amount of the loan has been repaid, the lender could then be encouraged to give the borrower a loan greater in size.
An unsecured loan can be availed for any purpose, whether it be expanding your business, or acquiring assets, or utilising it for working capital.
As there is no collateral or asset involved, unsecured business loans require less paperwork. At times, just an email of the scanned copies of their last six months’ financial statements would suffice for availing an unsecured business loan.
In case you are applying online, you just need to fill in some basic information and upload the relevant documents, and the approved loan amount would be transferred into your account of the borrower soon after.
Due to the many benefits described above, and easy availability, you need not worry about finding the right amount of funds to expand your business any more.