There are various aspects of the business that the business owner needs to handle himself when running his own business. The business owner has to ensure that the business has all the resources to run the business to its full potential. He manages all the departments all alone in order to keep the cost of production low and enhance profits.
But when a single person multi-task and handle various functions all alone, there are chances that he might miss some important aspects of the business. One such important aspect is the state of finances of the business. At times, the business owner realizes it late that there is something wrong with the finances and that there is a need for external funding for the business.
In such a situation, a business loan without collateral is the best option for him. First, collateral-free loans are processed and disbursed in a short time period. Secondly, there are plenty of financial institutions in India that offer business loans without security. The businessman can avail loans for business from them.
Business Loans without Collateral – Overview
Also known as unsecured business loans, the loans without collateral are a financial product designed especially for businessmen. These loans are meant to help the small business owner to have easy access to funds in emergency situations and without providing any collateral or security. Since no hypothecation of asset or collateral is involved, the loan processing is done quite faster. In most cases, the loan application is processed and the loan is disbursed within a few days.
The business owner gets a flexible repayment tenure ranging from 6 months to 24 months to repay unsecured loans for business. It makes them repay the loan conveniently through easy EMIs spread over a period of time. The amount availed under this type of loan can be used for various purposes, from expanding the business to increase working capital. The business owner can also pay taxes, utility bills, wages, etc. with the help of the loan.
The rising integration of technology in the Indian financial sector has made it easier and convenient for the businessmen to apply for business loans without collateral. They can apply for loans through online channels. They can also acquire all the information related to the various loan products available in the market. This will help in taking a sound decision. Also, when a loan for a business is availed online, the businessmen get to enjoy various other benefits as well, such as quick processing and disbursal.
How Business Loan Application is processed?
Although when a businessman applies for a loan, he is only interested in the final outcome of the process, i.e. to get the loan amount disbursed, it is important to know the entire loan processing process as well. Knowing the process will help to address the shortcomings in advance and so, he will face no issues while getting the loan processed and disbursed.
The following are the steps which are involved in the processing of business loan application by a financial institute:
- First, the business owner will have to find the right financial institution and apply for a loan through the online or offline channel, as per his convenience. After applying for a loan, he has to submit the copies of the documents required – KYC and financial documents.
- The lender would first check the CIBIL or credit score of the borrower and the business. The credit score must be more than 700, it depicts financial discipline. If it is not more than 700, then the loan application may get The lenders also weigh other factors as well in addition to the credit score. Other factors help in determining eligibility as a whole.
- After analyzing the credit score, the financial lender next analyses the submitted financial documents to check the eligibility. This step also includes checking the income tax returns, net worth statement, and bank statement.
- If the lender requires any other document, he will convey the same to the business owner. And the business owner must ensure that he provides the same at the earliest.
- The loan lender would again initiate the verification process. This time they will visit the business owner’s office and residence as well. The representative who has come for verification can also ask to provide the original documents for verification. It is important to cooperate with them.
- Some lenders also prefer to check the references provided by the businessmen in order to ascertain the business’s reputation in the market. It is important to give references to people who know the businessman very well.
- At this step, there will a personal discussion with the credit manager of the lending institution with the business owner. The credit manager will ask several questions that he might find relevant. It is important to provide correct and relevant answers to all the question.
- If the lender approves the loan application, the representative will share the same with the businessman over a message or phone call. Then he will come with the loan disbursal kit to get the borrower’s signature on the agreement and cheques. The business owner will have to provide cheques of the account which is active and used for business activities.
- After the contract is signed, the loan would be processed and disbursed within a few working days.
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With the option of business loans without collateral in Delhi, Jaipur, Mumbai, and other Indian regions, it is easy for the small business owner to control his finances in a positive way and meet all his liabilities in a timely manner.