The success of a small business venture not only depends on the level of sales and the percentage of profits. But, it is significantly affected by the effectiveness of funds management as well. As a small business owner, you must realise the importance of having adequate funds at your disposal. Having sufficient liquidity not only assures the smooth functioning of day-to-day operations but also allows you to maximise the growth potential of your business.
You can use the money for infrastructural up-gradation or stocking raw materials, as and when the need arises. If you do not pay close attention to your business cash flow and are blindly pursuing higher sales, there are chances that after a certain period, your funds would dry up. And you might have to contemplate scaling down your operations.
In order to avoid such a situation, it is essential to be pro-active and take the necessary steps to raise funds, as and when necessary. One of the most important sources of funds that can come in real handy during emergencies is of business loans. There are numerous specialised financial institutions offering business loan in India without security and with security for small business owners.
However, unsecured business loans or business loan without collateral are the best options for small business owners.
About Unsecured Business Loans
Unsecured business loans are specialised loan products that are offered by the financial companies for business owners engaged in trading of goods. There is no need to offer a collateral to avail of this facility. Traders are free to use the money for their business-related requirements, such as the purchase of goods, payment of salaries, payment of rent, etc. The maximum repayment tenor offered for business loans can extend up to 24 months, and the amount available is dependent on the credit profile of the borrower.
You can easily apply for a business loan in India without security using the online application mode. There are specialised finance marketplaces as well as websites of the lenders where you can compare loan products and apply using the online application module. You only need to fill in your necessary KYC and financial information to apply. If your profile meets the requirements of the lender, your business loan application would be approved and disbursed within a few working days.
How to Get a Business Loan in India?
Due to the strict screening criterion followed by most lenders, it is essential that you take due care while drafting your business loan application. Here are some important points that you must remember while applying for a small business loan:
- Check Credit Score: Most lenders require you to have a CIBIL score of over 700 to be eligible for a loan. If your CIBIL score does not meet their business loan eligibility criteria, the chances of your loan application being approved are reduced. It is advisable to run a credit check yourself before applying and if any issues are found, raise a dispute with CIBIL and get it corrected before proceeding ahead with the application process.
- Assess Eligibility: Different lenders have different business loan eligibility criteria, against which your application would be assessed. All this information is available online. So, assess your eligibility before you apply for the business loan and make sure you apply for an amount which is slightly lower than your eligibility.
- Prepare a Loan Proposal: No matter, how small your requirement is, prepare a proper business loan proposal accompanied by CMS data, business profile, financial documents, account statements, repayment plan, etc. It is very important to impress your lender because it makes things easier for you when the real application process starts.
- Prepare your financial strength: In order to increase the chances of your business loan application being approved, start preparing your financials well in advance. Make sure all your taxes are paid, GST returns are filed, income tax returns are filed, the adequate bank balance is maintained, and there are no cheque bounces in the last six months. All these details would be analysed by the lender while assessing your business loan application. So, it’s better to be prepared beforehand.
- Do your Research: With the power of the internet, you don’t require to run from here and there to post to gather information about various business loan products. Before finalising any business loan, make sure you do extensive research and then select the one which meets your requirements in the best possible way.
- Negotiate hard: Remember that money saved is money earned. Even a slight reduction in the business loan interest rate can turn into significant savings for you. Make sure that you negotiate hard with the lender for a reduction in interest rate. If your credit history is good, the lender would happily consider your request.
Just remember the points mentioned above while preparing your application for a small business loan. This would significantly enhance the chances of your application being approved!
To apply for a business loan, you need to login to the website of the loan lender. Fill the online loan application form available and upload the soft copies of the documents. If you meet the eligibility criteria, the lender will process your application and credit the loan amount to your bank account.