Benefits of Unsecured Business Loan

Simple Understanding of Business loans

Unsecured Business Loans as per the name suggest are offered by banks to meet short term requirements of working capital. Borrowers can avail this to meet a quick need of funds and application to his existing banker is going will take time in such cases , Unsecured loan is the best option available. Just like all loans unsecured business loan also has its pros and cons , which have been shared below :

Pros

No collateral

The first and the biggest advantage of an unsecured loan is that these unsecured business loans as the name suggest do not call for any collateral as secured loans. Customers who have pledged all the collateral security to the current bankers may find this types of loan as blessing in disguise. Unsecured business loans are obtained on the basis of credit & CIBIL Score without collateral or any other kind of security . It is mainly the credit rating of a person which decides whether or not that person is eligible for the loan.

Quick turnaround

Financial institution who offer business loans do this quickly & shorter time unlike secured loans which usually take more time due to checking and determination of the collateral value . Business loans do away with property related documents , payment of stamp duty as per local laws , obtaining no objection certificate etc . Funds can be received in 4-5 working days in bank account of the borrowers.

You can check on the latest rate of interest and also know what is best available for you by calling us.

Cons

Rate of Interest

Loan against property is offered at lower rate of interest as the loan is covered with collateral security. Unsecured business loans do not call for any collateral security, thus the interest rates these loans come with are usually higher rate with difference of 3% – 4% upwards & this is only indicative value. Due to high cost of borrowing customer hesitate to take this type of business loans.

Eligibility

This type of loans are offered on the basis of income tax papers. Applicant who are self employed individuals has to go through filling application form and submit income tax papers along with 6 months bank statements. Applicant also has to state the purpose of loan clearly . Applicant must own either residential or commercial properties in his name or immediate family members to be eligible for such type of loan. Applicant should first check on loan against property eligibility before applying for this short term loans as loan against property is available for 15 years as compared to this loan which is available for 3 years.

Salaried individuals may apply for a loan under personal loan category. They should first try for mortgage loan by proposing loan balance transfer of existing home loans. Applicant can use any home loan EMI calculator to check income eligibility as well as go to any online market place and check latest loan against property interest rates . They can get maximum of 60% to 75% of the market value of the residential property subject to income eligibility and clean track record of all loans being served currently and serviced in the past.

Debt Trap

Unsecured Business loans are normally available for a term of 1 year to 3 years . This can squeeze the cash flows out of business if the borrower is not able to manage the cash flow correctly . This may become a non reversal debt trap due to high cost borrowing , in such cases it is best to avoid such loans and instead go for secured borrowing options like Working Capital Finance & Loan against property or Loan against Rent receivables.

So Go ahead and apply online business loans in India with us