Informal credits are usually way more expensive than formal credit, making it difficult for MSMEs to address the accumulated financial burden.

To find a solution to this situation, several leading financiers have extended a collateral-free loan in the form of business loans for entrepreneurs and business owners. However, to maximise the benefits of this funding option, business owners need to know about the essential pointers of this credit option.

Salient features and factors of a collateral-free loan

What makes business loans different from other secured credits is the risk factor associated with them. Since individuals do not have to pledge any asset as security, it is feasible for most people. This collateral free loan helps in running the business smoothly and uninterrupted at all stages.

Besides, the list mentioned below highlights the essential factors and crucial features that borrowers must know before availing of this credit facility:

• High-loan quantum

Leading financial lenders extend substantial loan value to applicants possessing healthy credit history. These personalised business loans are significantly extended to provide much-needed encouragement to the enterprise and help them reach heights of profitability.

Whether a business owner needs short-term, intermediate or long-term loans, these advances for MSMEs and SMEs are ideal financing solutions. Eligible applicants can secure considerable funds to improve the infrastructure, maintain working capital, purchase equipment and raw materials or develop operations.

• Competitive interest rates

To boost small and medium business owners, reputed financial lenders extend advances at competitive interest rates. Ideally, entrepreneurs will be eligible to secure better repayment terms and services along with market-best interest rates if they possess a good credit score of above 700 or 750 and a low credit utilisation ratio. ألعاب كازينو

One of the simplest ways to ensure that your business CIBIL score stays above 700, you should clear your dues, pay credit card bills on time. استراتيجية بينجو Moreover, borrowers can improve their CIBIL and secure the desired loan amount by avoiding multiple loan applications.

• Repayment tenor

Ideally, a collateral-free loan like a business loan comes with a flexible tenor of up to 84 months. However, the loan terms and repayment tenor varies from one lender to another. Therefore, borrowers need to choose a tenor that suits their repayment capacity and requirements. روليت مجاني

To choose a suitable tenor, borrowers can use a business loan EMI calculator. Using this beneficial calculator effectively develops a sound monthly financial plan that ensures a hassle-free repayment plan without stressing your disposable income.

• Flexi-loan facility

Business owners can avail of this facility by withdrawing necessary funds to maintain their business cash flow at additional charges. Here, borrowers are required to pay only the interest amount as EMIs during the beginning of tenor, and this facility allows borrowers to maintain their working capital effectively.

• Eligibility and documentation

To ensure uninterrupted operations of some businesses, several financial institutions have set simplified eligibility criteria and documentation processes. For instance, large-scale financiers like Bajaj Finserv extend the following eligibility parameters to qualify for the collateral-free loan:

• Applicant must be an Indian citizen within the age bracket of 24-70 years
• One must possess a business vintage of 3 years
• Must have a CIBIL score of 685 or above

Borrowers must note that lenders may ask them to fulfil additional requirements to avail of the loan amount. Also, business owners need to submit a set of documents required for a business loan to support their eligibility. Some of the documents include-

• KYC documents
• Address proof
• Business ownership proof
• Financial statement (ITR copy, account statement of last 6 months, profit and loss statement etc.)

Thus, this collateral-free loan allows eligible business owners to meet their various business-related expenses. Moreover, leading financiers also extend business credit for specific requirements and entities, and they are-

• Working capital loans
• Machinery loans
• Term loans
• Business credit for women
• Micro loans, etc.

Besides, eligible borrowers can also avail of pre-approved offers extended by these NBFCs to simplify the loaning procedure and reduce the hassle of documentation. These offers are available on a wide range of secured and unsecured financial products. Intending borrowers can check their pre-approved offers by submitting their essential credentials.

As per a recent report, more than 80% of MSMEs in India are not sufficiently financed and seek financial assistance from informal sources. In fact, approximately 16% of MSME enterprises avail of formal credit facilities.

Though a collateral-free loan, such as business loans, are beneficial in multiple ways, borrowers must be careful while choosing the lender. A lender who extends simple repayment terms and is transparent about loan charges will make the borrowing experience hassle-free.