Unsecured Business Loan

Unsecured Business Loan

Category  » Bank Loan

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Unsecured Business Loan:

  • Businesses need ample amount of investment to fund expenditures related to expansion such as adding new lines to their existing products/services. In such a situation, business loans can come in handy as they provide much needed financial assistance to companies so that they can grow more competitive in the chosen markets. Like any other loan, a business loan is a debt which the company is obligated to pay back to the lender within a specific tenure according to the terms and conditions mentioned in the loan agreement. Start-up Business loans ca  n be taken for a variety of essential requirements like starting up a new firm, business expansions, dealer and vendor financing etc.
  • The major benefit of business loans in India is that it often does not require any collateral.

Feature of Business Loan:

  • Larger amounts can be availed depending on various factors including the size of the business, reported profits of the business, existing business liabilities, etc.
  • Business loans in India are offered in a manner similar to personal loans. Therefore, the documentation to avail a business loan is simple and the turnaround time is relatively short.
  • Business Loan tenure can be from 12 months to 48 months. In most cases, the borrower can also avail the benefit of prepayment in lieu of a nominal prepayment charge, which provides additional flexibility to the borrower.
  • Business loan interest rates varies from 15% to 20% which depends on various factors including but not limited to eligibility of the applicant, the size of the business, credit rating/score of applicant, type of business and loan quantum/tenure.

All these entities need to meet the following criteria to avail business loan:

  • The business owner/professional must be aged between 21 years to 65 years
  • The business should have been operational for at least 3 years
  • The business turnover must be at least Rs.1.0 crore per annum with minimum 2 lakhs of profit, however lower amount loans may also be availed as per the lender’s discretion.
  • A business partner can be a co-applicant in the business loan application. This is in fact recommended as it would increase the probability of getting a loan of higher quantum with longer tenure and interest rate.