In order to ensure smooth continuity of business operations and stay ahead of the competition, regular cash flow becomes quite crucial for any business. While large businesses can churn working capital internally, this is not the case with SMEs which are usually pressed for resources.
There are times when they run pillar to post to borrow capital from external sources. Most traditional financing mediums such as banks and private lenders prefer businesses which can mortgage any property against the loan. Since SMEs are hardly in a position to provide collateral, they often look for an unsecured business loan in India.
Also known as collateral free loans, unsecured business loans are a boon to SMEs as they can easily qualify for it. Here are various reasons why unsecured business loans are gaining popularity these days:
Of course, this the biggest advantage of loan for business without security! SMEs can access finance without using their property as collateral to guarantee the loan. This means that SMEs do not have to let go of their property possession and rights, and still treat is a capital asset in the books of accounts.
Quick Approval and Disbursal
Unsecured loans offered by fintech companies are processed digitally. SMEs can fill the application form and upload supporting documents online. Fintech companies use innovative technology and analytics which enables them to assess, approve and disburse loans swiftly. In fact, FlexiLoans provides collateral-free loans online within 48 hours and minimum documentation! With such fast and hassle-free processing, SMEs can deploy the loan in the business immediately and remedy the cash crunch situation at the tip of their fingers.
Usually, when traditional lenders provide a loan, it is attached to a specific purpose. So, businesses can’t use the loan for any other business requirement other than stated in the loan document. However, unsecured business loans enable SMEs to use the funds for any business purpose such as business expansion, working capital, purchase of equipment, invoice discounting and more.
Ticket Size of Loans
In the case of banks, small ticket loans outweigh the interest they charge while big-ticket loans are risky, so they expect collateral. However, unsecured business loans offered by fintech companies ensure that SMEs can borrow any amount ranging between Rs15,000 and Rs1 crore, depending on their business requirement. Whether SMEs need Rs25,000 for seasonal working capital or Rs75 lakhs for purchase of machinery, unsecured loans are available in any ticket size.
Flexible Repayment Terms
Loan for business without security can be availed at flexible terms and conditions. SMEs can make weekly to monthly payments as per their convenience and cash liquidity. They can choose to pay via PDCs or ECS Form/ NACH Mandate for automatic debit from bank accounts.
A good credit rating is not a prerequisite for collateral-free loans. Hence, SMEs with poor credit scores can also avail these loans. Moreover, unsecured business loans are easy to repay; they also help SMEs to improve their credit scores in the long run.
Given their numerous advantages, unsecured business loan in India is becoming a preferred choice to raise capital among SMEs. The online lending platform of FlexiLoans can help SMEs access quick, flexible and adequate collateral-free funds for growing their businesses.