When it comes to business loans, unsecured business funding has simplified borrowing for many ventures, especially those operating on the small and medium scales. These funding options are easy to avail against minimum lender requirements and bring suitable financing for business growth, expansion, and even day-to-day funding.
The loan option also comes with several flexibilities to make repayment convenient for the borrower in easy EMIs. A proper comparison among available lenders can also lead you through the market rates to the best interest rate levy for affordable financing. Eligible ventures can avail funding in a range of Rs.5 Lakh and Rs.25 Lakh without much hassle. Below is a detailed information regarding what this funding option comprises and how it works to improve your understanding of the financing option.
What is an Unsecured Business Loan?
Loans and advances provided by various financing institutions can be broadly categorised into secured and unsecured funding. Unsecured business funding is a financing option that does not require businesses to provide any collateral to secure a loan.
Such financing is sanctioned only based on the eligibility fulfilment and creditworthiness of a borrower. A business thus does not need to risk any asset to avail this type of funding.
Working of an Unsecured Business Loan
An unsecured business funding primarily involves three factors, i.e., eligibility fulfilment, loan availability, and total repayment. The following steps will help you better understand the working of an unsecured business loan.
Step 1: Meeting the eligibility requirements
The foremost step involved under business loan financing is fulfilling all eligibility requirements accurately. Once you have been through available financing options, you can choose a suitable lender to avail business funding.
Unlike secured financing options, it becomes critically important to meet all eligibility requirements laid down by your selected loan for unsecured business financing as lenders primarily rely on criteria fulfilment itself for loan sanctioning and approval.
Step 2: Applying to the selected lender
Once you have met all the eligibility requirements for the selected unsecured business funding, you can proceed to apply for a suitable loan amount with your lender. You can complete your loan application either online or offline.
However, it is suggested to go for a loan application online due to improved accessibility. In the process, you would only need to fill up the online application form with necessary personal and business financial and other details and submit.
Step 3: Loan application verification, approval and disbursal
On receiving the loan application, the lender verifies the applicant’s information and proceeds to approve a suitable loan amount as per eligibility fulfilment. Once approved, the loan amount is also disbursed to your bank account shortly for necessary funding.
Step 4: Loan repayment in easy EMIs
After you have received the loan amount, the repayment process starts with borrower paying the stipulated EMIs for every month across the agreed tenure. This shall continue until full repayment of the total loan liability.
One of the primary attractions of an unsecured business funding option is that it helps keep your personal and business assets risk-free. However, you must make timely and full payment of EMIs to ensure high creditworthiness for future financing needs.
Visit website to learn more about loans and finance.