Lack of capital can hamper the routine business operations and get in the way of the short-term and the long-term growth of an MSME. Reaching out to traditional lenders put forth an array of challenges to small business owners. From a complicated and lengthy loan application process to the requirement of collateral, acquiring the required amount of funds from banks has become an extremely strenuous activity for MSMEs.
Small business owners usually lack the physical assets that are required to be put up as collateral to get a business loan. In some situations, the asset is already locked in as collateral for a different loan and cannot be leveraged further.
An unsecured business loan presents itself as a productive solution for small business owners to acquire the required funds without the added stress of collateral. They are short-term loans that enable small business owners to meet their routine expenses like rent, employee salaries, raw material management, equipment purchase, and more.
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The most significant advantage of an unsecured business loan is that it can be effectively leveraged to meet routine business expenses and expand business operations. This article looks at why unsecured business loans are gaining currency among MSMEs in India.
The Benefits of an Unsecured Business Loan
- Seamless operations: A small business owner faces a plethora of challenges in today’s constantly evolving market. An unsecured business loan enables small business owners to overcome all the challenges to business growth with utmost ease. It alleviates the scope of any form of disruption to business operations even in the harshest of business climates.
- Repayment flexibility: Invoicing plays a major role in determining the cash flow of MSMEs. If most of the invoices are cleared at the beginning of the month, it can get hard for small business owners to pay the scheduled monthly EMI. Acquiring an unsecured business loan from a renowned NBFC can allow small business owners to leverage flexibility in terms of repayment. You can choose your own payment schedule that aligns with your monthly invoicing to avoid any missed payments.
- Quick approval: Some technically superior NBFCs like Kinara Capital can disburse an unsecured business loan in 24 hours—a significant benefit for small business owners seeking to address any immediate financial concerns. Where a loan application process at a traditional bank can take more than ten days, an NBFC can disburse the amount in almost half the time. Moreover, the advent of NBFCs has eliminated the need to step into a physical branch to acquire an unsecured business loan. You can complete the entire process online, from the eligibility test to approval right from the comfort of your home.
- Extra charges: Unsecured business loans come with business-friendly terms and conditions. This includes a lower processing fee and foreclosure charge and the absence of any hidden costs.
Therefore, acquiring an unsecured business loan from an NBFC is one of the best and most approachable ways for small business owners to gain access to formal credit. If you are a small business owner looking for an unsecured business loan, you should explore the offerings at Kinara Capital. As one of the leading NBFCs in the country, they disburse collateral-free business loans for asset purchase, working capital, and HerVikas special loan for women entrepreneurs.
The fully digital loan application process allows small business owners to acquire an unsecured business loan with minimum documentation. The process can be completed by the business owner or with the help of a professional Kinara Capital loan officer. Moreover, the unsecured business loan interest rate is calculated on a reducing rate of interest that allows easy EMI payments. Here are the documents that you will need to apply for an unsecured business loan at Kinara Capital:
- Business KYC details, including the ID and address proof of the applicant and co-applicant
- The PAN card of the applicant
- The bank statement of the last 12 months
- Business registration document
So, apply for an unsecured business loan from an NBFC and take the first step towards business growth!