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Tata Capital > Blog > Loan for Business > Are Unsecured Business Loans Safe for Small Businesses?

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Are Unsecured Business Loans Safe for Small Businesses?

Are Unsecured Business Loans Safe for Small Businesses?

Let’s face it! Running a business, big or small, without adequate working capital will get you nowhere. You need the right amount of credit if you wish to:

  • Launch a new product line
  • Pay off previous debts
  • Ensure ample working capital
  • Invest in machinery
  • Pay salaries

And this is why unsecured business loans are so popular. They help you cover a wide array of business expenditures quickly.

Is unsecured business finance safe for small businesses?

For smaller companies, unsecured loans for business come highly recommended. Here’s why.

You don’t need to pledge a collateral

As a small business owner, you want to refrain from pledging things like equipment, office premises and other assets as collateral. These entities help you grow rapidly at the very beginning. However, with unsecured business finance, you don't need to. Lenders provide this type of business loan without any guarantee or collateral. Therefore, all your assets stay in your name as you repay your EMIs.

Relaxed business loan eligibility

Unsecured business finance comes with a relatively relaxed set of eligibility criteria. So, if you are looking for a quick loan with relaxed application criteria, unsecured business finance should be your go-to.

At Tata Capital, we follow the following eligibility criteria:

  • Minimum age limit: 21 years.
  • Business age: 3 to 5 years.
  • Minimum revenue turnover: Rs. 12 lakhs to Rs. 50 lakhs depending on your business success.
  • CIBIL Score: For quick loan approval, you will need a score of at least 650 or more.
  • Financial stability: Last 6 months bank statements.

Additional Read: Pros and Cons of Unsecured Business Loan

Customisable repayment tenures

Suppose you are looking for an unsecured business loan for a start-up, and you need a customisable repayment tenure as your cash flow is inconsistent. For example, a certain quarter witnesses substantial revenue, while another does not. In such a case, unsecured business finance can provide you with a flexible EMI repayment tenure and ease your burden.

So, you can adjust your tenure according to your cash flow cycles and repay your EMIs comfortably.

Minimal documentation required

If you think lenders require you to submit a whole bunch of hefty paperwork to apply for unsecured business finance, think again! Even though this loan is collateral-free, you only need minimal paperwork to access these funds.

At Tata Capital, you will need to furnish these documents required to apply for an unsecured loan:

  • Identity proof: Driving license, PAN card, Aadhar card, voter ID card, passport (any 1)
  • Address proof: Aadhar card, utility bills, ration card (any 1) 
  • Income proof: last 2 or 3 years’ audited balance sheets and profit & loss account and Income Tax Returns (ITRs) and last 6 months’ bank statements. 
  • Proof of business: Business financials like partnership deed, business incorporation certificate, company PAN card (any 1)

Additional Read: Benefits of Availing Unsecured Business Loans from NBFCs

The bottom line

With all the above-listed benefits, it's evident that unsecured business finance is an excellent source of funds for small businesses. So, if you are looking for one, turn to one of Tata Capital!

We extend collateral-free loans for small companies at attractive business loan interest rates with flexible repayment tenures and minimal documentation.

To know more, visit our website or give us a call today!

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