Why An Unsecured Business Loan Is Beneficial For Small Business?

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An unsecured business loan is a savior for small businesses who cannot avail secured business loans. Running a business is not just a matter of putting sweat and blood. The business owner is required to put additional hours and travel extensively. He is required to does everything to track the growth of his business.

A businessman invests all his savings to get the business started. He also pools in money from different sources to fund his small business. However, there comes a time when he witnesses a growth opportunity but his personal funds do not suffice. So, in situations like this, a business loan in Delhi or other Indian city turns the best option for him.

What is a Business Loan?

A business loan is the credit facility offered by many lenders in India – banks and NBFCs. The money availed under this lending facility can only be used for different business-related activities. Depending on the type of business loan being availed, the businessman can avail a secured business loan or an unsecured business loan.

  • Secured Business Loan: A collateral business loan or secured business loan is offered against the collateral. The entrepreneur must hypothecate an asset with the lender. The amount sanctioned under this facility is proportional to the monetary value of the asset hypothecated. Mostly, a collateral business loan is availed by big businessmen who can afford to hypothecate assets.

  • Unsecured Business Loan: An unsecured business loan or collateral-free business loan is availed without any hypothecation of the asset. The money is sanctioned on the basis of the past loan repayments, bank statement, financial behavior, and creditworthiness of the borrower. These business loans without security are the best option for small businesses. The business owner can apply for unsecured business loans online as well as offline, depending on their requirements. A business loan without security is generally offered by NBFCs.

Why an Unsecured Business Loan is good for Business Growth?

When the personal funds of the small businessman dry up, he looks forward to availing an unsecured business loan to keep his business growing. Following are the reasons why a collateral-free business loan can be beneficial for a small business:

  • New Machinery: A new and updated machinery enhances the levels of production and reduces the cost. So, it is important to invest in machinery on regular basis. Instead of taking a huge amount of cash out of the regular working capital, an unsecured machinery loan can be availed to avoid a liquidity crunch. This will help in acquiring machinery without any stresses on finances.

  • New Office: A new office can be opened at a new location to grow and expand the business. The businessman can avail any type of loan according to his choice to acquire property/building. And then repay the loan for a business in convenient and affordable EMIs. The business loan EMI calculator can be used to calculate the amount of EMI to be paid.

  • Infrastructure: A business loan without security can also be beneficial for small businesses in terms of upgradation of infrastructure and capacity. Keeping business up-to-date for easy growth track is important. And the business entrepreneur must keep changing his offerings (products and services) according to the changing times.

  • Working Capital: In case the business is facing a liquidity crunch, a loan for business can be availed to take care of everyday expenses, like paying utility bills, suppliers, and other important reoccurring business payments.

  • Inventory: To get the orders delivered on time, the products must be produced on time. And raw material and other important things are required which can be fulfilled with the help of a loan for business without security.

Business loans in India are offered to provide excellent financial opportunities to grow the small business which may otherwise not grow due to lack of funds. There are many unsecured business loan lenders in India who offer types of loans for business. The business owner may choose to apply for a secured or unsecured business loan in India.

However, the entrepreneur is recommended to take the help of an expert before preparing his loan application. And give prior importance to business loan interest rate before availing a loan. Also, with that, since a loan for business comes with interest cost, it is important to assess the fund requirement in advance. It makes no sense at all to avail a loan and then the amount in the bank account and bear interest cost.

Rahul has over 7 years of experience in digital marketing. Prior to
joining ZipLoan.in , Rahul worked at Content Mart and was instrumental
in ensuring a 110% year on year growth of the business. Before this,
he worked at Jabong as a part of the International Business Expansion
team which focused on Overseas Markets. In the initial phase of his
career, he worked with autoportal where he achieved a 65% traffic
scaling. Rahul holds a Bachelors degree in Technology.

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