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Everything You Need To Know About Unsecured Business Loan: Features, Documents, And More

Opting for a Business Loan is one of the most preferred routes to expand an existing business. You can use these loans to act on your business plans and expand your business into different verticles. 

There are two types of business loans: unsecured and Secured Business Loans. Knowing which is best for your business is essential to maximise the use of these loans. 

An unsecured loan is a loan where no collateral (security) is necessary. These loans are a great way to add funds into your business quickly. 

Secured business loans, on the other hand, require an asset or collateral to be mortgaged with the financial institution.

Let us understand the major differences between secured and unsecured loans.

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Secured vs Unsecured Business Loans

Secured Business Loans refer to loans backed by assets your business owns. They may also be approved when private assets like a house are mortgaged. An Unsecured Business Loan comes without collateral and hence the borrower does not need to mortgage any assets as security. 

This is a big advantage and with other exclusive features of unsecured Business Loans, it has become the first choice of young entrepreneurs. Let’s explore them.

Features of Unsecured Business Loans

Funds from an unsecured Business Loan can be used for financing various business requirements, including the purchase of equipment, addition of working capital or the expansion of a company. It is a flexible form of funding that new-age NBFCs like Clix Capital offer.

The salient features of unsecured Business Loans are as follows: 

  • Simple and Fast application process 
  • No collateral or equity required 
  • Flexible repayment terms and periods 
  • Quick disbursement 
  • Low-interest rate 
  • No hidden charges

When to Apply for an Unsecured Business Loan?

The following are the ideal applications for unsecured Business Loans:

  • To purchase business inventory.
  • To attract fresh talent in the industry.
  • To support day-to-day business expenses.
  • For employee salary payments.
  • To extend business into a new neighbourhood or city.
  • Invest in any research or asset that can improve your business.
  • To purchase new machinery or upgrade existing ones

How To Get A Business Loan

The following are the primary eligibility requirements to apply for an unsecured Business Loan. However, the eligibility criteria may vary from one financial partner to another.

  1. Type of Organisation/ Business: A proprietorship/private limited company/closely held non-listed company/ partnership firm involved in the business of manufacturing, trading or services, proprietors, partnership firms employed in manufacturing, trading, services business, or private limited company.
  2. Minimum Turnover/ Income: The ideal turnover/income is Rs. 1 Crore.
  3. Business Experience: The individuals must be in the current business for a minimum of three years.
  4. Applicant Age: The individuals must be at least 21 years while applying for the unsecured Business Loan or under the age of 65 at the end of the tenure.

Documents Required To Apply For Unsecured Business Loan

  1. Completed Application Form
  2. Passport-Size Photograph
  3. Address proof (Aadhar Card, Passport, Voter ID, Driving License, Last 2 months Utility Bills)
  4. Identity proof (Aadhar Card, PAN Card, Government ID)
  5. Financial documents (PAN Card of Firm, Company or Applicant, GSTIN, 6-month bank statement, Copy of the most recent ITR form along with computation of income, audited balance sheet and profit & loss account for the previous 2 years, Proof of continuity of business of 3 years)
  6. Proof of ownership
  7. Current additional financial obligations

Smart Lending Firms—Clix Capital

Applying for unsecured Business Loans from conventional loan institutions can be a time-consuming affair. Fintechs are making loan sanctions quick and accessible to every entrepreneur. 

Getting unsecured Business Loans is significantly simpler than secured ones. It only requires a negligible amount of paperwork if you choose smartly. 

Clix Capital is one such lender. Businesses can now apply quickly with minimum documents, which automatically eliminates a lot of stress. You can count on such financial partners for working capital and business expansion plans.

Conclusion

An unsecured Business Loan is a go-to option when you do not possess any assets. Make sure to pick a reliable NBFC that provides a flexible payment period, loan amount, and sanction time to match your business requirement. We wish you well with your next business endeavour. 

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