Reasons Why Unsecured Business Loans Have Become Popular In India
An unsecured business loan do not require you to pledge any assets. Get to know the 4 reasons why they have become so popular in India!
An idea without execution is nothing. Similarly, a business without capital is worth nothing. Lack of optimum funds can hinder its growth and expansion plans. Businesses can choose from multiple options to fulfill their funding needs. They can seek help from Venture Capitals, Angel Investors, traditional banks, or NBFCs.
While all of these channels have their set of businesses, unsecured loans have become popular in India. In this article, you will find out why unsecured business loans have become popular in India.
What is Unsecured Business Loan?
An unsecured business loan is a short-term, small loan that helps you handle routine expenses. Its utilisation includes asset maintenance, payments to suppliers, and the purchase of raw materials.
The best thing about these small business loans is that these loans do not require you to pledge any assets. Besides using these loans for working capital management, you can also use the loan funds for business expansion. However, due to the small ticket size, these loans are perfect for immediate expenses that help your business turn a profit.
What are the reasons behind the popularity of unsecured business loans?The rise in popularity of unsecured business finance is attributed to the following benefits.
1. Helps in temporary troubles:Unsecured loans can help small business owners overcome challenging phases due to temporary disruptions in the market with their short-term and small ticket size loans.
2. Faster processes:Usually, small business owners are not experienced enough or not in the phase to determine the fund crunch soon. Often, they require funds immediately. A few lenders like IIFL Finance loans for small businesses are designed to make the loan approvals smoother and disbursals faster. All processes of an unsecured business loan are online.
3. Flexibility:Small businesses rely on invoice approvals to maintain cash flow and profits. If your business receives most of its bill payments after the first or second week of the month, it may struggle to meet the monthly payment schedule for a secured business loan due earlier in the month. The lender often provides EMI options in sync with their cash conversion cycle.
4. Favorable terms and conditions:Most unsecured business loans provide low processing fees and pre-payment charges, no hidden cost, auto-renewal of loan amount upon repayment, etc. These terms make unsecured business loans more attractive than any other fund-raising option.
Apply for a Business Loan with IIFL FinanceIIFL Finance is a leading unsecured business loan provider. We offer quick loans that are perfect for small businesses with small financial requirements up to INR 30 lakh. You can check the best interest rate at your nearest IIFL Finance branch or online.
The entire process, from application to disbursement, is 100% online. The disbursals are quick and take 24-48 hours. You can fulfill various business needs and repay them per your preferred cycle. Apply for an IIFL Finance business loan today!
Frequently Asked Questions
Q.1: What is an unsecured business loan?
Ans: An unsecured business loan is a short-term, small loan that helps you handle routine expenses. Its utilisation includes asset maintenance, payments to suppliers, and the purchase of raw materials.
Q.2: What are the different types of business loans?
Ans: A business loan can be a Working Capital Loan, Term Loan, Letter of Credit, Invoice Discounting, Overdraft Facility, Equipment Finance, Machinery Loan, Loans under Govt. schemes, POS Loans, or Merchant Cash Advance.