SMEs (Small and Medium-sized Enterprises) often require funding to ensure business continuity. Similarly, large corporations also need working capital at frequent intervals. For every financial urgency, business owners cannot search for investors. Investors might take multiple days for due diligence before investing. Sometimes, business owners require urgent funds to continue operations.
Expansion of business operations also requires financing. Among all the funding options available in the market, unsecured loans are most suitable for businesses. There is no need to liquidate business assets when in need of funds.
Read on to understand the importance of an unsecured loan for a business.
No need for collateral
The best part about an unsecured business loan is that there is no need for collateral. Business assets are essential and required to continue operations. There is no need to pledge the assets with a secured business loan. Since no collateral is involved, the lender will check the business’s creditworthiness before offering a loan. Small and new businesses might not have the collateral to secure a loan. They can benefit from unsecured loans and continue operations.
Easy approval process
Gone are the days when one had to visit the lender’s office to secure a business loan. The rise of NBFCs in India has made it easy to acquire a business loan. Business owners can apply online for an unsecured loan. Fullerton India allows business owners to apply for instant loans online. The business loan amount will be disbursed quickly to meet the needs. The website of Fullerton India is user-friendly, and one can submit the business loan application within minutes. Documents required for a business loan can also be submitted online. Everything is designed to meet the urgent needs of business owners in India.
Affordable interest rates
A business loan without collateral comes with affordable interest rates. You can compare different lenders and choose one with an affordable interest rate for business loans. Usually, interest rates for business loans in the market are between 17% and 21%. Businesses with good credit ratings can get lower interest rates on business loans. However, small business owners should consider reputed lending institutions to get the most competitive interest rates on loans.
Short and flexible loan tenure
Business loans have a shorter repayment tenure. Usually, a business can repay the unsecured loan within up to 4 years/48 months. Since the business will repay the loan quickly, it will become debt-free. Also, the borrower is allowed to choose the repayment tenure within 48 months. A business can choose to repay the loan within a couple of years and become debt-free. When the repayment tenure of a business loan is short, the borrower will pay less interest. Flexible payment options are available with business loans. Borrowers can make monthly payments or prepayments depending upon their choice.
Businesses can try raising funds from investors. However, investors may ask for a stake in the company before offering funds. For every need, a business owner cannot give out a stake in the company. In such cases, an unsecured business loan is a right choice for SMEs. The business owner will continue to enjoy the company’s full ownership with an unsecured loan.
Get working capital
Sometimes, a business might require cash to maintain operations. The capital required might be small to keep the business alive. For example, an SME might require a piece of equipment to continue operations. The business is not thinking of long-term finances. It is thinking of the present and requires an important piece of equipment. Business loans are perfect for working capital requirements. Business loans can be used for staff salary payments, service charges, creditor liabilities, debt consolidation, and more.
The best part of the business loan is no restriction on usage. A business can use the loan amount to pay employee salaries or open a new branch. The lender asks no questions before offering the business loan. The lender will only check for a business’s credit rating and repayment capacity before providing an unsecured loan.
In this competitive era, SMEs might find it hard to get the necessary funds. SMEs often require funds to maintain their competitiveness. Luckily, Fullerton India offers the best business loans in India. Also, the interest rates on business loans are lower. A business owner can submit the loan application online on the official website. Apply for an online business loan without collateral right away!