Unsecured Business Loan: All You Need to Know

The unsecured business loan interest rate offered by leading banks and NBFCs starts from 16% p.a. and the maximum loan can be availed up to Rs. 2 crores. The interest rates shall vary from bank to bank, depending upon the applicant’s profile and business requirements. The unsecured business loan interest rate depends on various factors, such as the applicant’s financial history, CIBIL/credit score , repayment capability, creditworthiness, annual turnover, etc.

These are loans taken with the intent of starting a new business , maintaining or expanding an existing business, or for any other business need. These loans add fresh capital to the business and help the entrepreneurs or management to realize the organization’s true potential.

Term Loan: Any loan whether it is secured or unsecured that is availed for specific time duration and needs to be repaid in form of EMIs within the defined time frame.

Working Capital Loan: Working capital loan can be availed to meet the day-to-day expenses of business and is approved based on the creditworthiness and repayment capacity of the applicant.

Overdraft: Overdraft is a type of loan or credit limit assigned by the lender which can be availed in parts defined by the financial institution. The interest rate is charged only on the used or availed amount from the assigned or sanctioned credit limit.

Loans under Government schemes: There are numerous Government initiated loan schemes under which small business owners can avail business loans at a comparatively lower rate of interest. These schemes include Mudra loan (PMMY), Stand-up India, Start-up Scheme, Prime Minister Employment Generation Program (PMEGP) , Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), SIDBI’s Loans in 59 minutes, etc.

Merchant Cash Advance : It is a type of cash advance that is based upon the credit card sales deposited in a merchant’s account. Loan amount is decided upon the credit card swipes or monthly volume of the business.

Micro Loans: Micro loans are generally offered by Micro Finance Institutions (MFIs) to meet the instant cash requirement of the borrower. The loan amount offered under Microlending ranges from Rs. 5,000 - Rs. 2 lakh or more depending upon business requirements.

Business Credit Cards: Entrepreneurs can also take business loans against their business credit cards. The loan amount is basically credit line(s) sanctioned by the lender to meet the working capital requirements of a business.

Additional Unsecured Loans include Personal Loan , Education Loan, Loans on Credit Cards , etc.

Different banks have varied criteria and features for their unsecured business loan products. Here are some common features of these loans:

Start-up enterprises, business owners, retailers, traders, manufacturers, SMEs, MSMEs , private companies, public companies, large enterprises, and partnership firms can apply for an unsecured business loan.

Also Read: How to Apply for Business Loan for New Business

Most banking and financial institutions offer unsecured business loans to their customers. However, the interest rates and eligibility criteria shall vary from one lender to another.

To apply for a business loan, applicants can check and compare various loan options that suit the business requirements. Follow the below steps to apply for a business loan by clicking ‘Business Loan’ on the homepage of the website.

Step 1: Fill in all the required fields, such as desired loan amount, employment status, annual gross sales or turnover, city of residence, years in current business, collateral type, and mobile number.

Step 2: Check the below box to agree on terms and further Click to ”Unlock Best Offers”

Step 3: Further you are required to mention the Company type, Nature of business, Type of industry, Gross Annual Profit, Bank Account, any existing EMI, Full name, Gender, Residence PIN code, PAN card, Date of Birth and Email Address.

Step 4: After submitting all the details, the bank’s representative will contact you to proceed with loan formalities.

Step 5: Once your loan application is approved, within defined working days the approved loan amount shall get disbursed in your mentioned bank account.

Unsecured Loans vs Secured Loans