In this new era of development, everyone comes up with innovative thoughts and ideas. But due to scarcity of funds some ideas are dumped and are not carried forward. People also plan for new businesses and new startups, but the financial conditions always stand against them. Therefore, we will help you to get a business loan without collateral securities.
Business Loan are basically the debts offered by the financial institutions to the needed parties who are looking for small scale businesses. But qualifying for a collateral-free business loan is not an easy task. You have to mortgage something in order to get loan sanctioned. Here in this blog, we’ll tell you some of the ways out to get a business loan for small businesses.
Table of Contents
- 1 Getting Collateral Free Business Loan
- 2 Top 5 Financial Institutions Lending Business Loan Without Collateral
Getting Collateral Free Business Loan
You can either get a loan from a financial institution or on the basis of your personal trust. The loan form the financial institutions also come up with formalities and paper works, whereas borrowing the money on personal trust would eliminate the formalities.
You can borrow the money for the business startups without collateral if you have a good relationship and trust with the lender. Here you’ll get the loan without mortgaging a single document. But the disadvantage of taking a loan on the personal guarantee is that the funds will always be limited. Don’t worry, because we will give you many more options for collateral-free business loan.
There are many businessman who are either in a sole proprietorship business or partnership business who also lends money without mortgaging any property. You can try to get the business loan from them as well at a low rate of interest. The drawbacks of taking the loans from the private vendor are:-
- Any delay in the repayment of the loan can cost your personal property.
- Funding amount are limited.
- No legal paper works.
Well, getting the loan on the personal level is quite tedious and time taking. Therefore, you can also compare some of the financial service provider who lends business loan without keeping any collateral securities.
Top 5 Financial Institutions Lending Business Loan Without Collateral
You can compare the service of all the financial institutions and then decide which service fits best to support your newly started business.
Bajaj Finserv Business Loan
Bajaj finserv grants collateral-free loan to the new business setups. You can take a loan from the institution without keeping any assets as security upto 30 Lacs. There is no pressure of repayment and you can take your time for clearing the debt which is maximum up to 8 years. Bajaj finserv also provides online service which will be convenient for you to do the day-to-day transaction.
- The minimum age must be 22 years.
- The maximum age should not exceed more than 55 years.
- The company’s age should not be less than 3 years.
- Previous year Income Tax Return must be duly filled.
- A Chartered Accountant should audit the turnover of the business.
- The rate of interest is 18% onwards.
- Processing fee charges is 2%.
- The charge for any lapse in EMI is ₹2500.
- Penalty interest of 2%.
If your business comes under the CGTMSE credit scheme then you can easily apply for a business loan of 2 crores without any collateral. ICICI sanctions collateral-free loan to partnership firms, Sole proprietorship, Private and Public limited companies. The borrower can purchase assets and the needed properties for business expansion.
- The minimum age for applying ICICI Bank Business Loan is 25 years.
- The maximum age for ICICI Bank business loan is 65 years.
- 5 years of experience in the same field of business is necessary.
- The business should have generated profit in the last 3 years.
- Processing fee of a maximum of 2% excluding taxes.
- Unsecured facility interest rate is up to I-MCLR-6M+6.50%.
- Maximum loan amount for collateral free startup is 2 crore.
Ziploan is also a financial institution which can help you to start-up your business. You can easily get business loan from the institution without keeping any security. There are some benefits of choosing Ziploan for taking the business loan.
- Fewer formalities and paperwork.
- No need of mortgaging a single property.
- Sanctions loan within 3 working days.
- Easy EMI’s without any prepayment expenses.
The businessman can take a loan for the purchase of machinery and working capital management. There is also an option of term loan which would be between the range of 1 Lac to 5 Lacs. So, you can also go with this option as well.
HDFC Bank is a trusted banking institution having good collateral free loan schemes. If you are willing to get a loan from an old and trusted institution then HDFC would be the best option for you. The terms and conditions of business loans are:-
- Grants business loan without collateral between the range of 40-50 Lacs.
- Processing fee of 0.99%
- Average interest rate of 15.75%
- Overdraft facility of 1 Lac to 5 Lacs.
- Repayment period between 12-48 months.
- Apply for a business loan using mobile banking and net banking.
- No Need of any guarantor and security.
Kotak Mahindra Bank
The final option you are left with is to try the Kotak Mahindra Bank Loan which don’t require any guarantor and security. You can get a loan of up to 75 Lacs without mortgaging any movable or immovable assets. The eligibility criteria for getting a business loan from Kotak business loan are as follow:-
- A business should have a minimum turnover of 40 Lacs.
- The applicant must be in the business for at least 3 years.
- Businesses must be of manufacturing, trading or service.
- The age of the applicant must be between 25 years to 65 years.
- Processing fee of 2% on loan amount and it is negotiable.
- Documentation charges of ₹3500 if the loan is less than 10 Lacs.
- Document charges increases to ₹6000 if the loan amount is more than 10 Lacs.
Note: (All the charges are exclusive of GST)
Well, you have various options for getting a business loan without collateral. Now it is up to you which option would be best for your business expansion. You can compare the interest rates, processing fee, documents needed and other formalities of different institutions and then make your decision.