Following a recent downturn, the Indian economy is coming back on track and RBI’s decision to keep the key policy rates unchanged has further fuelled this growth. This move by the apex bank has helped small and medium businesses to access necessary credits to strengthen their financial foothold.
In this regard, unsecured business loans have been a top choice for them. Owing to its range of advantages, this financial product has aided companies to meet an array of requirements.
6 advantages of unsecured loans for a business
Here are six notable benefits of this credit instrument that can help a business –
- No collateral
Unsecured business loans require no collateral, eliminating the hassle of arranging a guarantee before applying for credit. This is especially fruitful for small businesses starting their journey and may not have assets to mortgage.
- High loan amount
Even though the loan amount depends on the eligibility of an applicant and a particular lender, business loans like these offer a substantial quantum. Therefore, small and medium-size companies beginning their journey or planning further investments can consider it as a financing option.
- Quick approval
Being an unsecured loan type, it does not entail lengthy paperwork like its secured counterparts. Moreover, since loan applications like these have no mortgage papers attached, it eliminates the hassle of further verification, making way for swift disbursal.
Therefore, in case of any financial emergency, business loans can be your ideal choice.
- Repayment flexibility
Another notable advantage of business loans is their flexible repayment structure. Typically, financial institutions offer the liberty to their customers to find an instalment amount that suits their capacity. Additionally, borrowers also have the freedom to find a suitable loan tenor at their convenience.
- Easy eligibility criteria
The eligibility parameters associated with this financial product is straightforward, which makes it easy to qualify for. Here are some highlights –
- Age: 25-65 years
- Business vintage: At least 3 years
- Annual turnover: Depends on the requirements of financiers
These parameters can alter as per the choice of the lender. Also, individuals should take note of the documents and arrange them accordingly for a seamless loan application process.
- No end-use restrictions
The biggest advantage of unsecured business loans is probably their restriction-free usage. It means borrowers have the freedom to use these funds as per their needs. Hence, with this financial product, they can now meet a host of different business expenses.
Ways to utilise a business loan
Following are some pointers on how businesses can prosper with assistance from collateral free business loans –
- Support working capital
Business loans are a great option to manage and boost the working capital of an organisation. It keeps the cash flow intact and helps organisations to steer through difficult financial situations.
Since these credit options come with the flexibility of usage and easy repayment terms, business owners can manage their day-to-day expenses using this debt instrument.
- Manage inventory
Businesses are as strong as their inventory. Therefore, keeping the same updated is imperative to continue its growth. However, in case of any financial shortfall, one can resort to business loans to gather the necessary funding to procure inventory.
Moreover, companies that deal in seasonal products can opt for this credit instrument to meet their urgent inventory demands. The reason being, it is approved and disbursed quickly compared to other loans.
Furthermore, pre-approved offers extend by financial institutions like Bajaj Finserv streamlines this process even further. These offers, available for existing customers, fast-track the loan application process and saves time. Individuals can check their pre-approved offers online in a few simple steps.
- Funding business expansion
The competitive business loan rates make it a suitable financing method for business expansion. Individuals can now utilise these funds to buy or rent a new property and set up new production units. At the same time, business owners should keep in mind some tips to expand manufacturing businesses to help them in this process.
Since the business expansion is a costly affair, entrepreneurs will need to have a reputable credit profile and meet the turnover requirements to receive approval.
Unsecured business loans are convenient borrowing options for small businesses, as they can help secure necessary funding without any hassle. In addition, the easy to meet eligibility criteria further simplify this process.