Yes, you can get a business loan without collateral! Such loans are called unsecured business loans and are great for small businesses that are just starting and don’t own any (or many) assets to offer as security or if your business is growing and you need funding fast to meet the new costs.
What are the advantages of getting an unsecured business loan?
1. No collateral is required:
While secured business loans require you to offer the lender some form of collateral, this is not a requirement for an unsecured business loan. This means even if you default on the loan, you do not risk losing any assets to the bank.
2. Gives SMEs a chance to grow:
Not having any assets to offer lenders should not be a barrier to growing your small business. Unsecured business loans are a great way to grow your business and build your credit history. As the loan tenures for unsecured business loans are shorter than secured business loans, you can borrow small amounts, repay them quick, and then get another business loan. This will help you build your credit history and qualify you for larger loan amounts in the future.
3. Faster loan processing:
Compared to any other type of business loan, the processing and disbursal time for an unsecured loan is shorter since the lender does not have to spend time confirming the value and legitimacy of the collateral you offer them. Unsecured business loans also usually require lesser paperwork and documents, which reduces their processing time. If you are in good credit standing, have a strong business plan, run a profitable business, and have your KYC and business documents in order, you can get an unsecured business loan within days!
What’s the difference between a secured loan and an unsecured business loan?
The main difference between a secured business loan that requires collateral and an unsecured business loan that does not require collateral is the loan terms and amount the lender will offer you.
1. Loan amount:
Due to the lack of guarantee, lenders usually sanction smaller loan amounts for unsecured business loans. This is because more risk is involved for a lender in case you default on your loan.
2. Loan tenure:
Lenders offer unsecured business loans for a shorter loan tenure compared to other types of business loans. This can also be attributed to the lack of collateral. Since there is more risk involved for a lender when they give you an unsecured business loan, they prefer to recover their investment quicker. Once you repay your initial business loan as per the predetermined EMI schedule, you can get another loan for a longer tenure as you have proved you are a trustworthy business.
3. Rate of Interest:
Lenders charge a higher rate of interest for an unsecured business loan compared to a secured business loan. No collateral means lenders are more vulnerable to loss in case you default, so they charge a higher interest rate to compensate for that.
Why should I get an unsecured business loan with CreditEnable?
- We partner with 25+ leading lenders in India who offer over 100 specialized SME loan products.
- You can get an unsecured business loan in as little as 3 days when you apply for the loan with us.
- We check your loan eligibility within minutes. If you do not meet our lender requirements at the moment, we’ll tell you upfront, saving you time, stress, and money.
- If you are not eligible right now, we’ll tell you why and how you can improve your creditworthiness to get the business loan you need in the future.
- Getting a business loan with us has zero impact on your credit score. We do a soft pull of your Experian credit report that has absolutely no impact on your score, and we also send you a copy of this report, so you have a copy as well.
- Our matching algorithm will verify your information and find you a lender and business loan product that perfectly meets your business needs.
Zero Hassle. Zero Fees.
Business Loans. Enabled Simply.