Unsecured business loan is sometimes called as short term small ticket business loan which is best suited to immediate expanses such as business expansion, asset maintenance, vender payments and raw material purchases. Unsecured means collateral free that is it demands no security but certain documents to support your claim for the assurance that you will pay off the amount before the due date. However, it is based on the CIBIL score and the repayment eligibility. In addition to this, unsecured business loan amount can be up to Rs.15,00,000 with a loan tenure up to 7 years.
Hence, there are some of the reasons due to which the unsecured business loan is becoming popular among the business owner:
Gives Courage to Face Temporary Disruptions in the Market
Small businesses in India have to face major challenges such as lack of technology and marketing support, problem of working capital and inadequate finance. Despite all of them the business owner hopes for profit that too after demonetisation and the Goods and Service Tax (GST). Due to this one tax system the tax increases from 15% to 18%. This creates problems for small businesses. As they have to pay extra money whenever they buy any product. However, the big scale industries were able to protect themselves by using different schemes. On the other hand, small scale industries had to face a big loss. Therefore, unsecured business loan plays a very important role and gives confidence to small businesses to face hard times due to the disruptions caused in the market. Moreover, it also stabilises the market by giving business owners access to funds for working capital.
Fast Loan Approval and Quick Disbursal
Business owners take loans when they them use instantly. But what if your loan approval takes a number of days? Do not worry because unsecured business loan comes up with faster approval. Usually, any traditional bank loans take at least 10 days to get approved. On the other hand, unsecured business loans are meant to give support to business owner. Therefore, it provides you with quick disbursal of funds. Moreover, a business owner can use this loan for any purpose such as purchasing machines or products or hiring worker. The banks or NBFCs will not ask you how you are utilising the funds until you are paying off the amount on time.
Business Friendly Terms
When you choose unsecured business loan you get business friendly terms and conditions unlike any other loans. Therefore, there would be low processing fees and pre- payment charges which means a business owner can pay off the amount any day before the tenure if he gets some profit from his business. Moreover, unsecured business loan also provides you auto- renewal of loan amount upon repayment and there would be no hidden costs.
Flexible Repayment Options
A small business relies on invoice clearances to maintain its cash flow and profits. If a business gets most of its invoice payments after due date which is early in the month, it may struggle to keep up with the monthly payment schedule. You can get this type of loan from the NBFCS such as Bajaj Finance or and from banks such as ICICI, HDFC bank and Axis bank.
Get Loan With Bad Credit Score
You can even get a loan when you have a bad or zero credit score . A credit score of 700 or above is generally considered good. A score of 800 or above on the same range is considered to be excellent. Most credit scores fall between 600 and 750. Higher scores reflects better credit decisions taken by you and can make lenders confident of future repayment obligations. Every person needs to require at least 750 score to avail any kind of loan. However, there is no clear number which decides your fate of getting loan. The cutoff point for “good” credit depends on what you’re trying to buy, and who you ask. As different banks have their own requirements and policies.