Running a successful small business is no easy task. Small Business Loan is provided these days. You need constant flow of money to make the payments on time. Whether it is for the suppliers or to pay salaries to your employees, you will need consistent flow of funds. Irrespective of the size and type of industry you operate in, if you have the funds on hand, you can grow your business. However, small businesses often find it difficult to get access to funds and this is when small business loans come into play. If you are in need of funds, you can consider applying for small business loans with no collateral. Not a lot of businesses own assets and if you are one of those, this loan is ideal for you.
There are two main types of loans available in the industry today. One is the secured loan, where you hypothecate an asset to get funds and the other is an unsecured loan where there is no need for hypothecation and you can get funds based on your profile and credit score. Hence, if you have a strong profile and a good repayment history, you will be able to get a loan without any collateral requirement. Here are a few things you need to keep in mind.
Interest Rate of Small Business Loan
The first thing about an unsecured loan is the interest rate. Since there is no hypothecation of property, the risk associated with the loan is high and you will have to pay a high interest rate. Even if you have a good credit score, the rate of interest on your loan will be higher than the interest rate on a secured loan. However, it helps to compare the interest rate offered by different lenders before making a decision.
The loan amount will be based on your business profile and repayment history. If your business is viable and shows the ability to generate profits in the long term, the lender will be happy to offer a high loan amount. But it is important to consider the purpose of borrowing and then decide the amount you need. All lenders may not approve the loan amount immediately, they may have some requirements in terms of turnover and profit and if your business meets the same, the loan application will be approved.
Repayment Tenure of Small Business Loan
The tenure will be based on the loan amount and lender. However, a lot of small business loans come with a long and flexible tenure, making it easier for you to make the repayment on time. You must use the EMI calculator to get an insight into the instalment you need to pay every month. The calculator will require you to provide the loan amount and tenure and based on the same, you will get the EMI.
Loan Application and Processing of Small Business Loan
You can make an online loan application and since it is a business loan with no collateral, the application will be processed and approved without any delay. You do not have to hypothecate an asset or get the asset valued, this will save time and your application will move quickly. You simply need to make an online application by filling the form and submitting the documents required by the lender.
The lender will verify the documents and process the loan without any delay. You will have the funds in your account and you are free to use them wherever you like. A business loan with no collateral is the first choice of many business owners. If you own an asset-light business, it is best to apply for a business loan without collateral as it will suit your needs.