For the growth of a business, funding is essential. Be it long-term objectives or the need for working capital to carry out everyday activities funding is an absolute necessity in every aspect of your business. These requirements for capital can prove to be quite tricky for new businesses and young entrepreneurs.
An optimum solution to this problem is acquiring an unsecured business loan. An unsecured business loan allows business owners to obtain loans without providing collateral to the financier. Small and budding businesses profit greatly from these types of loans as they don’t have enough value to turn in collateral but still require funding.
The rate of interest of these types of loans differs from bank to bank. The value of the loan could be anywhere from 1 lakh to 50 lakhs. Although the lending system in India has made it very easy for people to obtain loans there are still things that an applicant needs to check and take care of before the final submission for the loan.
Things To Check Before Applying for Unsecured Business Loans:
- Loan amount:
There are many vendors in the market which can offer you an unsecured business loan. Your primary step should be to compare the amount of the loan offered by each vendor. This would give you a better idea about which vendor would suit your needs and requirements the best.
The lenders would check the liquidity of your company and would revert with an amount, you can then decide if you want to work with the vendor or not. It is always advisable to choose the vendor who is offering you the highest amount of loan available as then you would be able to work with more cash.
- Loan tenor:
It’s extremely crucial to check the tenor of the loan offered by the vendor before choosing to proceed with all the necessary formalities. Flexible repayment options can help you greatly when it’s time for repayment of the amount. Before closing the deal make sure to talk about the loan repayment process, it’s always recommended to choose a vendor who is offering flexibility when it comes to loan repayment. This flexibility will allow you to be always at ease.
- Additional charges:
Often there are hidden additional charges that many institutions only reveal at the end. You need to check for any hidden charges and ask the vendor to be upfront about it from the beginning. Such additional charges might include things such as fines when missing an EMI payment, processing charges, and charges related to foreclosure. Having a clear idea about all these charges would make sure that nothing surprises you in the future.
- Lender’s credibility:
It’s important to remember there are many vendors who would be willing to offer an unsecured business loan for your enterprise. Some of them might not be genuine and could be running a scam. It’s crucial to perform background research and check up on the credibility of the lender. By conducting appropriate research on the lender, you can make sure that you are not going to be a victim of a scam or any other fishy scheme.
Unsecured business loans are very crucial for small and budding businesses and companies. These companies in their nascent stage need funding to grow and prosper. An easy way to secure this funding is through an unsecured business loan which doesn’t require you to submit collateral. Keep the aforementioned factors in your mind while applying for an unsecured business loan from a vendor for your company or firm.