Are you looking for a loan to start or expand your organization? If so, then an unsecured business loan from a Non-Banking Financial Company (NBFC) is a great idea. Here is why:
Borrowers don’t need to pledge collaterals
Usually, a loan is taken against a bank guarantee or collateral. However, most lenders extend an unsecured loan without the borrower pledging any collateral in return. Therefore, such a loan becomes a great funding source when you require a significant amount of cash. Besides, in case your business does not work out, you don’t have to worry about losing any personal or commercial assets.
Relaxed business loan eligibility criteria
Another advantage of an availing an unsecured loan for your business is its relaxed eligibility criteria. In fact, a credible NBFC won’t even ask for hefty paperwork while you file your application. Having said this, you do require a stable source of income while applying for this loan.
An NBFC will likely request you to submit your financial statements for the last 6 to 12 months to gauge your income stability. They may also ask for your PAN details. If you can furnish these documents and show a steady income source, your chances of obtaining unsecured business finance will be high.
When you take a loan, you typically repay it through fixed monthly instalments and tenure. However, several NBFCs extend flexible EMI schemes where you can prepay your loan and save on interest or renegotiate your tenure if need be. Simply put, when you take an unsecured loan from an NBFC, you always have more room to negotiate your repayment terms.
Besides, you can always use a business loan EMI calculator to calculate your EMI payments and craft a budget accordingly.
Fewer restrictions on fund usage
You can avail of unsecured business loan for a wide array of business-related expenses. There are only a few conditions NBFCs approve this loan with. Firstly, timely EMI payment and secondly, you should only use the funds for business-related expenditures. Choose an unsecured loan to start your company, expand it, buy equipment, or use it as working capital; it’s all up to you!
Higher loan sums
Since there is no asset attached as collateral when availing of this loan, you can request a substantial amount. When there is asset collateral involved, the loan amount depends on its value. However, if you apply for a significant unsecured loan amount, make sure you have a good CIBIL score (above 750) and a well-crafted business plan.
In the end
Know that due to competition, NBFCs offer unsecured loans at highly competitive business loan interest rates. What more can you ask for? Obtaining funds without pledging collaterals that too, at a low-interest rate, is all the support you need to give your business the boost it requires.
So, if you are eyeing that new office building or machinery, prep your application, compare lenders for interest rates, and compile all documents. Also, figure out the business loan eligibility criteria, tenures, and other charges before you apply for an unsecured loan for your business.