Well, you may have excellent entrepreneurship skills, and a great plan chalked out, but without sound financial planning, it is nearly impossible to put the plan into action. Whether you want to start a new business or expand an existing one, you need finance to kickstart a project. The best way to get funding for a business is to get a collateral-free loan for your business.
A collateral free business loan is an unsecured loan. The best thing about unsecured loans is that you do not have to offer any asset or agreement to borrow the loan against. It is the reason why the interest rates on such loans are very high, but they are easy to acquire.
These types of loans are less complicated and easy to understand, unlike other loans which involve a lot of tricky issues and falls under the category of personal loans as well. This saying goes well with collateral-free loans. Those who urgently requires money, collateral-free loans come in rescue for them.
What are Collateral-free loans used for?
If you want a collateral-free business loan, then information regarding the history and nature of the business, assets and liabilities, number of employees etc. have to be mentioned. You also need to give the financial statements of at least the past three years of the business since personal loans are granted after examining the credit history of the loan seeker. It helps the bank ascertain the financial position of the company and judge whether the amount asked for a loan is justified.
It is important to note that a business application should contain all the relevant information and not conceal any crucial information that can alter the decision of the bank or the lending institution to grant a loan. Among other things, the motive of taking a loan should be clearly mentioned. Thus, there are various things that are needed to be considered during the process of sanctioning an unsecured business loan application by the bank.
On what basis, collateral-free loans are granted?
This loan is similar to the procedure of dispensing a credit card. Collateral-free business loans are granted based on the credit history, net worth, employment history and stability of the lender. Therefore, if you have an excellent credit score, the chances of getting collateral-free loans are better. And if everything goes well, you can even manage to get the loan at the lowest possible interest rates.
Why it is easy to get approval for Collateral-free Business loans?
Collateral-free loans work wonders for those who do not have any asset or collateral to display against the loan. It is why most of the businessmen seek such loans and find it easier to get an instant approval for the same. Apart from this, there are many more reasons why one should apply for collateral-free loans and save time for themselves from personal loans that come with high-interest rates. Let’s look at the benefits of having collateral-free business loans –
- No security needed – This loan comes without any security so you need not worry about anything else but your credit score.
- Flexible payment tenure – Collateral loans have flexible payment tenure of 5 years. That gives the lender a sigh of relief for repayment.
- Quick process of the loan – It is obvious that if you are not been asked any details in return for getting a loan, it will take less time. This is why collateral-free business loans quickly get processed.
- Easy loan payment option – Lender can make the payment of the loan as per their ease. The best option is to select the auto-debit alternative and be tension free.
How to apply for a collateral-free loan?
It has been noticed that small and medium enterprises lookout for collateral-free business loans. Either they are starting a new venture or wanting an upgrade for their existing trade. One can seek the help of a financial advisor or can visit the bank to get more information about it and know how such loans can be granted. However, the eligibility criteria to get an unsecured loan is mentioned below and can help to understand what you need to apply for such loans –
- A lender must have an excellent credit history.
- He/ She should have a valid source of income.
- The lender must have required valid documents when asked.
Collateral free loans are always the safest and flexible option to choose while applying for a business loan because it helps you get a right amount to invest for your business for a long term and that too without keeping anything on stake. If you are looking for loan schemes that are easy and will quickly get approved without collaterals, then you must check the Indifi website for reference. They have many loan schemes to choose from as per your preference.