Businesses that have emerged in the past didn’t have much in option for loans other than the personal secured ones. It meant to provide collateral in the form of security, but things took a whirl with the increased demand for instant cash-in loans.
Is There Provision For Unsecured Business Loan?
Today, many trustworthy web-based lenders have come up with unsecured business loan options. These are helping aspiring entrepreneurs like you to start new ventures without much risk. Although the interest rate, in this case, is somewhat higher than the traditional loans, underlying benefits are more in the count.
The interesting thing is that many people yet not know that the pros of availing of unsecured business loans can anytime outweigh its cons.
Reasons Why Startups Lean On Unsecured Loans
Let’s here find out the most significant reasons for choosing unsecured loans. Can startups really find privilege in these unsecured business loans?
Applying is like breeze – Most direct lenders offer easy-to-borrow business loans for borrowers. Now you can apply for unsecured business loans from the comfort of your office or home. You simply have to visit their website, check out the options, and find the best one as per your need. On these websites remain the details of each loan and an application form. Just by filling in the form, a borrower can choose what best suits his/her business needs.
Minimal documentation required – Unsecured business loan doesn’t encompass much documentation, and that’s one of the best parts about it. Primarily, the borrower only needs to submit the scanned copies of his address proof, identity proof, a canceled cheque, and SPDC. Sometimes, lenders might also ask for a few certificates to prove your business existence along with necessary financial documents and bank account statements to check your business vintage.
Instant amount sanction – Getting a business loan has further been made easier with the online application process. The only criteria that remain here are to meet the eligibility norms. As soon as you are found eligible, the amount will be disbursed and credited to your account minimum within 24 hours. This instant loan disbursal process is one of the critical factors for increasing unsecured business loans.
Loan in spite of bad credit – It may happen that sometime in the past, you have failed to pay your credit card bills or any other outstanding dues. It often reflects a low credit score or bad credit based on payment history and current financial situation. As a result to which your chances of getting finance reduces by a significant margin, leaving unsecured loans for bad credit as the only possible option. This type of loan has helped many startups recover from zero.
Never asks for shared ownership – In most instances, entrepreneurs are found to approach angel investors or venture capitalists for funds. First of all, convincing them is a massive task in itself, and on top of that, these investors also ask for shared ownership. As a result, proprietors like you lose the sole ownership. In comparison, an unsecured business loan is a far better option. Here, you never have to worry about sharing or losing your ownership. Whatever profit you make by utilizing the business loan is solely yours to enjoy.
No collateral required – As the name itself suggests, these business loans are “unsecured” in nature. You need not provide any collateral against taking credit from the direct lenders. As a result, this unsecured loan becomes especially beneficial for emerging businesses and doesn’t have any material asset to provide as collateral. To be precise, an unsecured business loan is a much more feasible option for startups and SMBs.
Shorter loan tenure with flexible repayment – Most direct lenders grant an unsecured business loan as short-term credit. Typically, the tenure extends between 12 to 60 months, which allows the owners to breathe for a while. The shorter loan tenure also makes it easy for the borrowers to keep their cash flow position positive. In recent times, multiple web-based lenders offer flexible loan repayment options to make the repayment process a lot easier.
Those mentioned above are a few of the many benefits that an unsecured business loan has to offer. Once you are opt-in for the same, you can better understand the details thoroughly.
Also, the eligibility criteria for unsecured business loans are simple and easy to acquaint with. Find here what you need to fulfill for an unsecured business loan.
Eligibility Criteria For Unsecured Business Loan
- The borrower should be within the age group of 22-55 years
- The business vintage should be 3 years or more
- Your business should have filed for income tax returns in the past 1 year
An unsecured business loan is an exceptionally beneficial option to keep in positive cash flow. Before applying, make sure you have well-discussed or read the factors like interest rates, prepayment charges, and essential documents for the loan.
Don’t make a move without weighing the pros and cons in question, but the possibility is that you’ll find the pros more in count than the cons when it comes to this loan.