What is an Unsecured Business Loan?

What is an Unsecured Business Loan?

An Unsecured Business Loan is a loan without any collateral/security that helps SME companies raise debt for purposes such as expansion, project financing or equipment financing.

 

• An Unsecured Business Loan does not require any collateral.
• Applicants looking to procure this type of small business funding should ideally have a high credit score.
• Generally, unsecured loans for businesses are taken in the form of a term loan repaid in EMIs.
• The maximum amount disbursed for an Unsecured Business Loan normally ranges between Rs. 15 lakh and Rs. 1 crore.

• Unsecured Business Loan interest rates in India usually range anywhere from 16.5%-22%. There is a higher perceived risk by banks so rates for Unsecured Business Loans tend to be higher than that of other types of loans.
• An Unsecured Business Loan in India typically has a tenor of 1 to 3 years
• Unsecured Business Loan – Documents to have handy

  • IT returns of last 3 Years
  • Last 2 year audit report and audited Financials (debtors & creditors list a must)
  • Last 6 months bank statement
  • Certificate of Incorporation - for Pvt and Public Ltd companies
  • Partnership deed / MOA / AOA
  • Certificate of Registration for sole proprietors
  • Residence/Office Ownership Proof
  • Address Proof and identity Proof

  * Documents required for Trusts: Charity Commission Letter (in addition to company details)