Collateral-free loans (unsecured loans) are loans that do not require the borrower to pledge an asset as collateral to get the loan. The loans are issued based on the borrower's creditworthiness rather than hard assets. Collateral-free business loans specifically referred to unsecured business loans are availed by businesses and companies without pledging any security.
Collateral-free business loans allow businesses to access capital based on their financials alone, without tying up assets. This allows them to tap into funds for various business needs, like working capital, equipment purchases, renovations, or expansions. The unsecured nature provides flexibility in the utilization of the loan amount toward diverse business expenses.
Collateral-free loans for businesses are MSME Loans that are most suitable for micro, small, and medium enterprises (MSMEs). On the other hand, collateral free unsecured loans to individuals seeking financing for personal needs are well known as personal loan.
For businesses unlike large corporations that can secure huge capital loans in crores of rupees against assets, MSMEs, and individuals often require smaller unsecured loans.
On the personal front, salaried employees and entrepreneurs can avail of collateral-free loans for needs like:
So, whether it is smaller business loans or personal financing needs, collateral-free loans serve an important purpose. The unsecured nature allows borrowers to obtain funds without asset constraints. This is especially useful for MSMEs, employees, and individuals who may lack hard assets to pledge.
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Interest rates on collateral-free business loans tend to be higher than traditional secured loans that require collateral. Additionally, interest rates are determined based on the financial profile of the individual business.
|Up to ₹50 lakhs
|11..99*% p.a. onwards
|Up to 6 years
Collateral-free loans for businesses offer flexible access to capital without putting your assets at risk. Explore various lenders and unlock the financial freedom to grow your business. Here is a comparison of business loan interest rates offered by top banks and NBFCs:
|Top Banks & NBFCs
|14.95% - 19.20% p.a.
|12% p.a. - 18% p.a.
|10% p.a. - 22.50% p.a.
|IDFC First Bank
|10.50% p.a. onwards
|Kotak Mahindra Bank
|16% p.a. to 26% p.a.
|Bank of Baroda
|7.25% to 13.50%
|11.1% to 16.35%
|13.25% to 19.99%
|16.00% - 22.00%
|19% p.a. to 24% p.a.
|2% per month onwards
|1% per month onwards
|1.50% per month onwards
|12% to 27% p.a.
Read Less*The interest rates are subject to change. Do visit the official website.
Need a Business Loan?
The Indian government offers several collateral-free business loan schemes to support entrepreneurs and small businesses. Here are some of the most popular schemes:
Loans For Micro and Small Enterprises (MSEs):
While specific requirements vary across lenders, some general eligibility criteria apply to most collateral-free business loans. These are:
General Business Loan Eligibility:
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By preparing your documents beforehand, you can streamline the application process and increase your chances of securing a collateral-free business loan. While specific requirements vary across lenders, here's a general list of documents typically required for a collateral-free business loan application:
Business Registration and Identification:
KYC Documents for Owners/Directors:
Need a instant Loan?
Collateral-free business loans offer several attractive features for entrepreneurs and businesses:
Applying for a collateral-free business loan is simple. Just follow the below-mentioned steps and get the funds you need for your business.
Step 2: Open the business loan application page. Enter your mobile number and OTP.
Step 3: Specify the desired loan amount and email. Next, choose the Business Loan option.
Step 4: Choose if you have a Business Proof (Yes/ No)
Step 5: Provide income details and Click the ‘Submit’ button.
Take the next step? Apply for a loan now!
Collateral-free loans are loans provided without requiring any assets as security.
Personal loans, small business loans, and student loans often don't require collateral.
Yes, several lenders offer collateral-free business loans. However, eligibility depends on your credit score, business performance, and other factors.
The maximum loan amount varies depending on the lender and your creditworthiness. Amounts can range from a few thousand to several hundred thousand dollars.
Interest rates typically range from 10% to 25%, depending on the lender, loan amount, and borrower's creditworthiness.
Yes, credit scores are a crucial factor in determining loan approval and interest rates for collateral-free loans.
Repayment terms vary depending on the lender and loan amount, typically ranging from 1 to 5 years.
Secured loans require collateral, like a car or property, to mitigate the lender's risk. Collateral-free loans offer flexibility but may have higher interest rates.
Eligibility criteria vary by lender but typically include minimum business age, credit score requirements, financial performance, and a well-defined business plan.
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