The 5 Step Guide to Get An Unsecured Business Loan Facility

Unsecured business loans are among the most popular ways to secure funding for an enterprise and its operational activities. The high loan amount of up to Rs.45 lakh without providing any collateral makes it a viable financing solution for many businesses.

To tap into the growing demand for such credits and encourage the growth of India's business sector, leading financiers now offer loans at agreeable terms. Nevertheless, to streamline the entire process, individuals need to learn about the important steps to avail business loans and follow them accordingly.

5 steps to avail an unsecured loan for business

Step 1: Find out whether you qualify for a credit option
It is crucial to determine the loan eligibility criteria before applying for an unsecured business loan since a rejection of the application can leave a hard pull on one's credit report. This can erode the current credit score and further hamper one's scope to avail credit in the near future. Generally, leading financiers may require entities and self-employed individuals to meet a few simple criteria, including these to qualify for credit

• Applicants should be between the age of 25 years and 65 years.
• They should have a CIBIL score of 750 or higher.
• Their business must be at least 3 years old.
• Applicants must have filed last year's ITR.

Note that applicants with a high CIBIL score, a regular flow of income, and a spotless credit profile are more likely to avail better repayment terms from lenders.

Step 2: Determine the loan amount you need and the purpose behind it
Once they confirm compliance with the eligibility criteria, entrepreneurs should identify how much working capital their business needs to meet a specific requirement. For instance, if a business owner plans to apply for a loan to purchase manufacturing equipment, he/she should factor in its cost and installation charge and then proceed to avail of a credit that is enough to cover the total expense.

Step 3: Compare lenders to avail loan at competitive rates
Next, individuals should compare the prevailing business loan interest rate in India at which leading financial institutions offer an unsecured business loan. Interest rates extended by lenders depend on several factors, including the applicant's creditworthiness, monthly turnover, credit profile, loan amount, tenor, etc. Individuals should also make sure to check out additional charges to determine the overall cost of borrowing.

Entrepreneurs can use a business loan EMI calculator to determine both the installment amount and their repayment capability. It will also help understand how loan tenor and amount impact business loan interest rate in India.

Step 4: Find out about required documents
Financier requires unsecured business loan applicants to submit documents to back up their eligibility. Usually, one needs to submit these documents to complete the verification process –

• KYC.
• Proof of address and identity.
• Bank statement.
• A copy of ITR.
• P/L statement and balance sheet audited by a chartered accountant.
• Proof of business ownership like registration or partnership agreements.

Leading financial institutions like Bajaj Finserv also provides pre-approved offers to customers that simplify the documentation and make the process of availing loans simpler. Usually, such offers can be availed on financial products like personal loans, business loans, credit cards, etc. Check your pre-approved offer in a few seconds with your name and contact number.

Step 5: Check the steps involved in the application process
Once individuals have gathered ample information about the above-discussed steps, they should find out about the application process.

Most leading financial institutions allow individuals to apply for an unsecured business loan online. Usually, applicants must fill an application on the lender's website or app with the required information and submit them.

In case the financer offers a loan offline, businesses may check out the process involved to choose the most convenient method for them. Besides these, businesses should also pay attention to the terms of service offered by financiers and unsecured business loan features in detail to make the entire process of availing funds simpler.