Starting your own business is one of the greatest feelings for every aspiring entrepreneur. You are no longer answerable to anyone and are free to take your business forward as the way you like it. At the start of your business venture, you must fund your business activities through your personal sources and keep on infusing more funds on a regular basis. In the present uncertain market conditions, starting a new business is full of unique challenges. But after your own funding sources have dried out, it is time for you to take some serious business decisions. You need to identify a suitable source of finance to keep your business on the growth path steadily. Considering the fact that your venture is a new one, the best option that you have at your disposal is Loans for a small business without security.
What are Business Loans without collateral?
Collateral free business loans are a form of unsecured financing option that is offered by a large number of financial institutions in India. There is no need to hypothecate any security to avail capital loans for small business, and you are free to use the amount for any business-related purpose. This unique feature makes unsecured business loans one of the best funding options for new businesses or start-ups. The repayment tenure for these loans can go up to 60 months with the rate of interest varying between 12-20% p.a.
Due to recent turmoil in the financing sector in India, lenders have become very selective while approving applications for business loans without collateral. As such it is desired that the application should be complete in all respects and fulfil the entire eligibility criterion, to ensure that the proposal for loans for a small business without security is approved comfortably.
How to ensure finance for your new small business?
If your new business is also facing a financial crunch, then you must read the guide mentioned below to understand various factors that have the final say in deciding the fate of your application.
- Prepare thoroughly
As the entire process for approval of an application for an unsecured business loan takes a few weeks to be approved, you should prepare carefully before starting the procedure. You need to plan everything out quickly and get working. Any unnecessary delays from your end will only delay your access to funding. Do all the research and keep a list of shortlisted lenders who can meet your requirements. After you have done so, start preparing the documents and fill up the application form.
- Highlight your experience
Your business might be new, but you must have been working in the said field for a number of years. You need to highlight your rich experience to the lender in order to assure them of timely repayment of the unsecured business loan. As your business does not have a long history, your personal experience and track record becomes even more critical in such a scenario. Your job experience would help convince the lenders about your seriousness, and they are more likely to approve your application.
- Keep an eye on your credit score
Maintaining a good credit score is essential for access to credit facilities for varied requirements of your business. You need to make sure that your credit score is always more than 750 so that you get access to a large number of borrowing options and that too at lowest possible interest rates. If at any time your personal or your business credit score drops below 700, then you must work towards improving your credit score and take professional help, if necessary. Your credit score has a significant influence on the final outcome of your unsecured business loan application.
- Prepare a business plan
You need to prepare a comprehensive business plan to explain to the lender as to how would the money would be used in your business and what benefits you expect to reap from this new investment. You also need to include details regarding the proposed repayment schedules. This is a critical document, and you must take help from your staff members or finance professional to prepare a comprehensive business loan proposal. This document should not have any looses ends and must provide answers to any questions that the lender may have.
- Keep following up
No matter how much you try, there would always be some pendency list coming from the lender. Do not get irritated by the requests for additional documents as it is all being done to process for application for the unsecured business loan. Always keep your business as well as personal financial documents handy and whenever your lender asks for any of these documents, provide the same at earliest.
You need to keep all these factors in mind while preparing your business loan proposal as it would significantly enhance the chances of your application for business loans without collateral being approved.
Author Bio :
Rahul Setia works at Ziploan.in, RBI registered NBFC as AVP Digital Marketing. Rahul enjoys creating innovative marketing strategies and is an expert at website data analysis. He is passionate about blogging and frequently shares his extensive knowledge through guest posts on different portals. Rahul has done his bachelors in Information Technology from Gurgaon.