Collateral-free business loans have become a popular funding option for small ventures lately for many favourable reasons. These loans are easy to avail with simple eligibility requirements and also come with various funding flexibilities that make them easy to manage. For instance, a business loan without collateral from a reputed lender comes with flexible repayment options that help one align the business finances easily for liability repayment.
Nevertheless, as they are unsecured funding options, the eligibility requirements laid down by the lender must be met to avail financing. One must also take care of other essential aspects when planning to avail the funding option. Below given is a step-by-step guide on how you can avail a collateral-free business loan for small ventures conveniently.
Steps to Avail a Small Business Loan without Collateral
Identify your funding needs
A good financial health is signified by the optimal balance between business debt requirement and debt minimisation. When seeking to avail the necessary debt for your business venture, the first step should thus be to identify the financing quantum needed. An appropriate and optimal need for funds aimed to boost business growth is also backed by lenders.
Create a repayment plan
You must also go for a primitive identification of revenue sources that would be allocated towards loan repayment. It helps create a strategic funding plan, thus lending the concerned financial institution a confidence of debt stability and risk reduction when processing the loan application.
Go for an interest rate comparison
Next, proceed to research about the available rates of interest offered by different lenders in the market. Also, consider other charges involved, which should help you minimise the cost of your loan and keep repayment affordable.
Seek a suitable lender
Once you have narrowed down on the available lending institutions providing the lowest rates on your business loan without collateral, you can zero in on the best one as per other criteria. These factors can include the maximum loan availability, tenure flexibility, repayment options available, eligibility stringency, documents requirement, etc. Based on these factors, proceed to find the best lender offering an optimum balance between loan features and the cost of borrowing.
Meet eligibility and document requirements
Having selected a suitable lender to borrow the funds from, the next step is to meet their eligibility and document requirements. The standard eligibility criteria include factors like age, income, city of residence, citizenship, occupation, etc.
Document requirement is also in line with the minimum eligibility criteria with the best lenders, reducing paperwork and simplifying the processing of a business loan without collateral.
Decide on the loan amount and tenure suitability
After making sure that you meet all the eligibility and document requirements, decide on the loan amount you need to avail and select a suitable tenure accordingly. With some of the best lending institutions, financing up to Rs.25 Lakh is available as collateral-free business loan with tenure extending up to 5 years.
Apply for your collateral-free business loan
At last, you can proceed to apply for your business loan with the selected lender. While both offline and online options are available with most reputed lenders, it is ideal to apply for loans online for streamlined and fast-tracked loan processing and approval.
Before applying, make sure to check whether your credit score exceeds 750 or not. A higher credit score nearing 900 is always beneficial when it comes to negotiating for the most favorable terms of your business loan without collateral.
Also, learn more about loans and finance.