A smooth flow of liquid fund is the lifeline of any business. If you want to give wings to your business, you will be in need of enough working capital for your business. Ideally, the working capital of a business should come from the revenue generated by the business but this doesn’t happen all the times. Many a time, businesses had to face such a situation where the survival depends only on the immediate financial boosting. These are the times when entrepreneurs take a step towards loans for their businesses. Loans for a business can come from various sources such as a secured business loan, unsecured business loan, investment from angel investors, investment from a venture capitalist or sometimes it may be a personal loan too. Though there are many sources of funding, one has to be much conscious about the safety of the business while choosing any of them. The concern increases further when you own a small business.
For a small business, an Unsecured Business Loan is considered the safest and the best funding option. Finance Buddha explains why an unsecured personal loan is best for small businesses
Your Business Recatches the Growth
The lack of adequate fund can cripple your business and hinders the growth. The fund is needed for each and every functioning of a business such as purchasing inventory, paying wages, paying utility bills and sometimes to meet unexpected expenditures. An unsecured business loan can come to the rescue when a small business needs urgent funding for working capital. An unsecured loan is preferred here as the processing of such loan is done within a very short span of time. One doesn’t need to wait as long as they need to wait for the disbursal of a secured business loan.
Lesser Risk Profile
The risk profile is very low in unsecured business loans for the borrower. An unsecured business loan is a collateral free loan. The borrower doesn’t need to put any of his assets in lien to avail the loan. Availing an unsecured loan is preferred for a small business as most of the small businesses lack such valuable business assets against which a loan can be taken. Additionally, a collateral free loan can give you the feeling of being secured as your assets are out of any kind of risk.
Flexible Eligibility Criteria
Most of the SMEs are unable to fulfill the eligibility criteria set by the traditional lenders for a business loan. To come over such situations, one can approach lenders for unsecured business loans which come with a comparatively simpler set of eligibility criteria. The fintech lenders offer unsecured business loans with a much faster processing and flexible eligibility criterion.
Flexible Repayment Option
Unsecured business loans come with flexible repayment option too which is a much-required feature for SMEs. The loan tenure of a business ranges from six months to three years. One can opt for any tenure according to the convenience. The repayment can be done on a daily, weekly, fortnightly or monthly basis. The flexibility of repayment gives the borrower a better opportunity to repay the whenever it is convenient for him. A borrower can have a stress free repayment of the loan while opting for an unsecured personal loan.
An unsecured business loan is similar to a personal loan which is multipurpose. Such loans can be used for any purpose associated with the business. But if you go for a secured business loan, you are to specify to the lender about the usage of the borrowed amount and adhered to it. The lender has the authority to reject the loan application if the lender is not satisfied with the usage of the loan amount. While availing an unsecured business loan, the borrower will have the final call on the usage of money and lender has no rights on interfering in the same.
The Flexibility Of Loan Amount
The loan amount of a secured business loan depends on the value of the collateral. The maximum loan amount can be 70% to 80% of the value of the collateral. But if you opt for an n unsecured business loan, the loan amount depends on the need of money. One can avail loan for small amounts like ₹ 50 thousand or bigger amounts like ₹1 crore.
Customized Solutions for SME Needs
Unsecured business loans are tailor-made loans exclusively for the Indian SMEs. There are various options from which one can choose such kind of business start-up loans that meet his requirements. The flexibility on repayment, the varied range of loan amount and the flexible tenure are some of the features which made an unsecured loan for businesses much popular. One can repay the whole borrowed amount at a single ‘bullet’ installment or in easy EMIs whichever he/she is comfortable with.