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Posted on Wednesday August 11th, 2021

With COVID-19 restrictions changing daily, every business person is under great deal of stress by disruptions in supply, lower cash flows and increasing overhead costs. Nowadays, many lenders are offering secured and unsecured business loans to keep your business healthy as well as help you to provide the customers, a quality services and products. Being a new business person, when you don’t have much of assets to pledge for loan, you can also Apply For Business Loan without collateral.

Yes, such loans are called unsecured business loans especially for those who don’t have any assets to offer as collateral. It could be great if your firm is growing and you require funding to cover new costs. Collateral is a main difference between secured and unsecured business loan which have a great impact on loan terms which we will discuss in detail.

→ Loan Amount: As there is no requirement of security, the loan amounts sanctioned by lenders are small for unsecured business loans as there is more risk involved to default on payments where as secured loans will generate you a desired loan quantum.

→ Loan Tenure: Unsecured loans are always offered for a short tenure as compared to secured business loans. As there is more risk involved for lender to recover the loan money but if your repay the loan as per predetermined EMI schedule, you can secure other loan for longer tenure easily because of your trustworthy business.

→ Interest rate: Most of the lenders charge higher interest rate for an unsecured business loan than a secured one. Providing a lender with no security makes you more vulnerable to loss in case of default, for which they charge high rates to compensate for that.

There are some advantages linked to unsecured business loans which are mentioned below:

→ No collateral: A secured business loan always demands for some form of collateral but in unsecured loan, one does not require collateral. It means even if you default in case of such loan, one does not risk losing any security to the lender.

→ A chance to grow: If you don’t have any asset to provide a lender, it should prove as a barrier for your business. Therefore, unsecured business loans are great way to build a good credit score as well as these loans have shorter tenure, one can borrow small quantum, repay them quick and can secure another business loan qualifying you with larger loan amounts.

→ Quick processing: The loan processing and disbursal time for unsecured business loan is less as lender does not have to spend time in verifying the value and legitimacy of the asset you offer them. These business loans generally require minimal documentation which reduces its processing time. If you have a good credit history, strong business plan and business documents in hands, you can easily process a business loan within few days.

If you want to Apply For Business Loan Online or offline, start your unsecured business loan application with ShubhBank today. You will experience a zero hassle and zero hidden charges on our business loans.