Ways To Get Small Business Loans Without Collateral

Small businesses may need large amounts of money to fund daily operations and undertake business expansion activities. It comes as a shocker to many first-time business owners. The expenses take up all your time and energy, making it difficult to focus on other important tasks to grow the business. 

However, it would help if you did not worry because it is so easy to get loans nowadays. Gone are the days when you could not get a loan without collateral. Today, there are many routes that a business owner can take to get credit without offering any collateral as security. 

In this article, we will discuss the sources of small business loans.

Sources of Small Business Loan without Collateral:

Small businesses can avail of collateral-free loans from financial institutions. Additionally, small business loans are availed from various government schemes without any collateral requirement. Some sources of small business loans without any collateral requirement are:

1. Lending institutions such as banks and NBFCs provide collateral-free personal loans for businesses to applicants if they qualify for the eligibility criteria. These criteria will vary across lenders and include the age of business, credit score, etc. The best way to move forward is with an NBFC as their processes are smoother and faster. New-age lenders like Clix Capital make it easier than ever with their paperless processes and minimal documentation. 
   
   

2. Government Schemes like Pradhan Mantri Mudra Yojana (PMMY) and Credit Guarantee Fund Scheme (CGFS) provide business loans to small businesses without any collateral requirement. Small businesses can benefit from these schemes if they satisfy the eligibility criteria of each scheme. These schemes are designed to foster and guide the growth of the MSMEs sector in India.
   
   

3. Friends and family – Well, it is not a business loan in the traditional sense, but you can tap friends and family for a loan. Remember to treat it like a regular loan and clarify the interest rate and repayment schedule before accepting the loan. Make sure to return the loan as per the schedule to keep your relationship intact.  

How to Get Small Business Loans 

The tricky part of any loan process, including business loans, is understating what to do and when to do what. Sound confusing? It is actually not! All it means is to understand and follow the below-listed points: 

1. Satisfy the Eligibility Criteria: Some NBFCs offer SME business loans without collateral. This credit facility is when an applicant fulfills the eligibility criteria. This criterion includes age limit, business vintages, turnover, etc. Refer to the lender's website to check if you meet the eligibility criteria.
   
   

2. Prepare Documents Required: With NBFCs, minimal documents are required for the business loan application process. The typical document requirements include photographs, identity proof, residence proof, financial documents, etc. 
   
   

3. Documents: The whole list of documents necessary for the business loan application is available on the lender's website.
   
   

4. Fill Out the Application Form: Ensure that the information is correct to expedite the business loan process. New age NBFCs have simplified the process, taking only a few minutes to complete.
   
   

5. Chat with a Representative: After filling out the application form, converse with one of the company's representatives to find out more details about the loan. You can use this opportunity to clear any doubts and confusion that you may have about their business loan offering.
   
   

6. Loan Agreement: An agreement must be signed to get the loan amount (if approved) disbursed to your bank account. 

Conclusion:

Small businesses can avail of business loans to meet any of their business expenditures. The government of India has sanctioned many credit-related schemes to help the nation's MSME sector grow. Small businesses can benefit from these schemes. They can also benefit from SME business loans without collateral requirements offered by NBFCs.