Collateral free business loans are debt instruments which are not securitized by any asset or mortgage and are designed to fulfill a variety of business needs. From emerging entrepreneurs who are running a venture independently to joint enterprises operated by several partners- these loans can be availed by all.
Given below is a simplified summary of the entire process of availing a collateral free business loan:
Making an Estimate of the Loan Amount Required
Before applying to any bank or Non-Banking Financial Company (NBFC) and comparing interest rates from different lending institutions, a Collateral free Business Loans seeker should start by considering the amount to borrow. Here, it is important to factor in one’s repayment capacity, business turnover and current liabilities.
Once a tentative and practical loan amount is decided upon, the next thing to do is look for banks and NBFCs that provide loans of the range sought by the business owner, while also keeping a tab on the eligibility criteria.
Personal, Financial and Business-Related Papers
The documentation required for verification before the lending institution grants approval depends on the type of loan (secured or unsecured) sought. Secured loans have more complicated documentation requirements when compared to unsecured loans as there is an asset to mortgage for the former. Generally, the business certificate, KYC documents, Profit and Loss Sheet, Balance sheet, business plan, cash flow statements and bank documents are required.
Lastly, one can apply to the bank or NBFC through its website by filling up and submitting the online application form along with the documents mentioned earlier.