Every business owner needs the right head-start to grow their company, just the way they envision it. The most common choice for this is a business loan, which aids payrolls, bills, marketing budgets, renovations, and so on. Today, collateral-free loans have become the norm, where you don’t have to risk any property or asset. However, is that the right choice for you? To decide that, take a look at the pros and cons of a business loan without collateral, mentioned below.
1. No more risking your assets
An unsecured business loanprovides the best advantage of not having to pledge any guarantee or security. You can easily access funds without any guarantor or risking any asset. Moreover, since you haven’t hypothecated to your lender, there is no risk for any property seizure either.
2. Building your credit history
When you avail a loan, any lender will go through your credit history and if it’s non-existent, they won’t grant the amount. Availing a business loanwithout any collateral is a great way to build your credit history, and to make that happen, all you have to do is pay your EMIs timely.
3. Get your approvals faster
Patience is a virtue, but not when it comes to loans, isn’t it? You need your loan as soon as possible to get your business going, and collateral-free ones will help you do just that. With such a loan, you will get faster approvals, as there’s no authentication and evaluating collateral assets required.
4. Flexible options for repayment
NBFCs usually offer unsecured loans as they can take the risk, and hence, offer flexible repayments as well. You can select a repayment schedule which is the best fit for your business financials, which will also save you from any penalty for late EMI payments.
Additional Read: Benefits of Availing Unsecured Business Loans from NBFCs
1. Proper credit score requirement
Credit scores are crucial for unsecured business loan eligibility.This means that the lenders will assess your credit score before approval since they get no collateral. To avail such a loan, you must possess a high credit score, or else they can easily deny the amount.
2. Specific documentations
Usually, unsecured loans don’t require too many documents or asset papers when you wish to avail them. However, there are specific documents that will be assessed to grant you the loan, such as – KYC papers, PAN card, GST statement, bank account statements, office, and residential address proof. If you fail to provide any of these, the loan will get denied.
3. Higher interest rates
Collateral-free loans are a risky business for most lenders and hence, they provide higher interest rates.
Easy collateral-free business loans to make your life easier
If you’re looking for an unsecured loan, Tata Capital can be the one-stop solution. Their high eligibility, structured EMI options, and affordable business loan interest rates will make sure that you get the best loan, collateral-free and hassle-free!