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An unsecured business loans is also referred as small business loan and are provided by commercial banks and Non-Banking Financial Corporations operating in India. Lenders provide unsecured business loan only to business entities without mortgaging any fixed or moveable asset it means without taking any collateral security. Banks offer an unsecured business loan only on the basis of financial statements of a business entity, the minimum loan amount a lender offers is as low as Rs. 2 Lakhs and maximum loan can go up to Rs. 100 Lakhs for a tenure in the range of 1 to 5 years with an interest rate in the range of 12 to 32 percent. Below are the key reasons to take a small business loans.
Business loans are the loans which are obtained without the use of any property as collateral for the loan are also termed as signature loan. These loans are the low risk one for the borrowers and are solely depends on the creditworthiness of the borrower. An unsecured business loan requires no collateral and the borrower do not need to pledge their asset in order to avail the loan. The lender here accepts the risk of default and has no legal rights to seize your property if you fail to pay back the loan. However, a strong credit history is must to avail this type of loan.
Business loans are the loans which are obtained without the use of any property as collateral for the loan are also termed as signature loan. These loans are the low risk one for the borrowers and are solely depends on the creditworthiness of the borrower. An unsecured business loan requires no collateral and the borrower do not need to pledge their asset in order to avail the loan. The lender here accepts the risk of default and has no legal rights to seize your property if you fail to pay back the loan. However, a strong credit history is must to avail this type of loan.
A business loan can be secured or unsecured. Secured small business loans are the kind of loans that are backed up by security, generally valuable assets and items your business owns. This type of lending is often termed as asset-backed lending since the lending amount here is backed by assets. These loans come with lower interest rates, higher borrowing limits and longer repayment tenures.
Small unsecured loans are those loans which are not backed by any asset. They do not require any collateral and hence there’s a higher risk for the lender. This loan is normally backed up by a business’s trading position. These kinds of loans come with higher interest rates, smaller amount and are given for a shorter period of time. Since you are not risking any valuable business or personal asset, the lender cannot seize any property or income in case of default on the loan. These loans are comparatively cheaper than the credit cards.
These loans do not require any collateral means the borrower do not require providing any business or personal asset as security.
These loans require a high credit rating as this involves more risk for the lender to grant these loans.
Unsecured loans come with high rate of interest and short tenures.
These types of loans typically take less time to apply. Once approved you can have the funds disbursed in your account within 24 to 48 hours.
Since the loan amount is not being calculated based upon the percentage of the asset but is based upon the health of your business, your cash flow your credit profile, you may even qualify for more money.
