Benefits of unsecured business loans for the small and medium enterprises in India?


The number of Small and medium business enterprises are on the rise in India. The government is doing its best to facilitate the growth of such companies, as they help generate employment for the country while increasing revenue, all at the same time. However, since most of these new companies exist as fresh entities, it is not a hidden truth that such companies are hard pressed financially or lack access to proper finances when needed. In a situation of a financial crunch, a big and well-established company may easily reach out to major government and private funding corporations who are more than willing to provide secure loans to such companies as they deposit very valuable collateral and impressive Credit scores. But the case is not the same with SMEs, where due to lack of linked properties or a good credit score, SMEs tend to opt for unsecured business loans.

What are unsecured business loans? In simple language, an unsecured business loan is a kind of loan that is given out against the creditworthiness of a company instead of a collateral deposit.

Let us see some points to explain the benefits of unsecured business funding for small and medium enterprises in India.

  • No collateral: As mentioned above, this is one of the prime highlights of an unsecured loan. An SME can get an unsecured loan even without having to mortgage anything, your property and assets stay yours. This serves as an advantage to SMEs as they don’t have to spend time or efforts in arranging for collateral.
  • Faster processing: The time needed to disburse an unsecured loan is much shorter in comparison to secure loans. This is because of their relaxed paperwork and non-requirement of collateral. An unsecured loan is especially helpful for SMEs and medium-sized businesses as they might need immediate finances during certain situations.
  • Short deadlines: An unsecured loan is expected to be paid back in a short duration making it easier for companies to manage their budgets; long lasting loan tenure can sometimes feel like an overwhelming sense of debt even if it is being paid off timely.
  • Unrestricted Financing: Once an unsecured loan is passed, it is then up to the borrower’s discretion to how he wants to utilize the money for his business. Whether it is for working capital or buying machinery, the borrower would not need to specify the purpose or details of expenditure to the lender at the time of applying for the loan simplifying the process as a whole.
  • Easy Access: Nowadays it is easy to find a lender for an unsecured loan. You may also search for Fintech companies online that offer online business loans. The process is safe and quick.

By having a fast processing period and minimal documentation unsecured business loans makes it easy for small and medium scale businesses to avail for finances. This motivates them to grow and perform better. Many Small scale businesses have benefitted immensely by receiving an unsecured business loan.

With such advantages as no collateral, fast disbursement, and shorter repayment terms, it reduces the burden of many small and medium scale businesses ensuring steady growth and financial advancements.

Borrowers are burdened with no restrictions when it comes to spending the loan amount. They hold the right to direct the cash flow in the required fields like working capital, or buying equipment’s and machinery, etc. Applying for unsecured business loans can be easily applied by feeding the form, with necessary details, attaching proofs and documents and photographs, available on the company’s official website where the loan amounts are sanctioned in no time once the applications get approved.