It is not easy to start a business in India. The primary issue is that you need to have a lot of collateral, which is difficult if you don’t own any property or if your property is not worth much. This article will tell you how to get a loan for a business without security and other documents.
What is a business loan and how does it work?
A business loan is a type of financial assistance that is typically provided to small and medium-sized enterprises. A business loan is a type of debt financing. It typically comes in the form of lump sum or instalment payments, and it can be used to purchase assets or cover operational expenses.
The borrower agrees to repay the loan with interest over a set period. The interest rate on the loan is determined by factors such as the creditworthiness of the borrower, the duration of the term, and prevailing market rates for similar loans. A business loan may be secured by collateral or unsecured.
How to get a business loan without security and documents in India?
Getting a business loan is not an easy task. However, there are some ways to make the process easier.
- Get a guarantor: You can get a guarantor who will be responsible for repaying the loan if you fail to do so. A guarantor should be someone with good credit history and financial stability.
- Get an NRI business loan: If you are an NRI then you can take a business loan from overseas banks in your own currency and at low-interest rates as well. You will also have to provide collateral in the form of assets or property in your home country which will be taken over by the bank if you default on payments.
- Apply for loans from international banks: International banks offer loans in your own currency at low-interest rates because they have a good reputation in the international market. It is easier for them to secure your loan if you are an international customer.
A business loan without security and documents can be obtained from banks, NBFCs, and private lenders.
The process for getting a business loan without security and documents is easy. You just need to fill out an application form with your personal details, company details, and financial statements. You also need to provide collateral if required by the lender.
Some lenders will also require you to provide a personal guarantee or a guarantor who is a director of the company. The process of getting a business loan without security and documents may take some time depending on the lender’s requirements but it is worth trying because it can be easier than other types of loans.
Eligibility for getting a business loan without security and documents in India.
The business loan eligibility criteria for getting a business loan without security and documents in India is the following:
- The applicant should be 18 years of age or more
- The applicant should have a valid PAN card and an Aadhaar card, if applicable.
- The applicant should have a bank account with any of the scheduled commercial banks.
- The borrower should be an Indian citizen.
- Net worth of the borrower must not exceed Rs 10 lakhs (Rs 10 million).
- Credit score must not be below 600 points.
Business loans are a necessity for any new business that is looking to take the next step. Without a business loan, small businesses will not be able to grow and expand their operations.
The first thing that you should do when applying for a business loan is research the different types of loans that are available however, the most popular ones are secured and unsecured loans]. Secured loans require an asset as collateral while unsecured don’t require any collateral at all.