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Unsecured Business Loan
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FAQs

What is an Unsecured Business Loan?

An Unsecured Business Loan is a loan without any collateral/security that helps SMEs and startup companies raise debt for purposes such as expansion, project financing or equipment financing.

Features

  • An Unsecured Business Loan does not require any collateral.
  • Applicants looking to procure this type of small business funding should ideally have a high credit score.
  • Generally, unsecured loans for businesses are taken in the form of a term loan repaid in EMIs.
  • The maximum amount disbursed for an Unsecured Business Loan normally ranges between Rs. 15 lakh and Rs. 1 crore.
  • Unsecured Business Loans for women
  • Banks offer an exclusive commercial loan scheme to empower women entrepreneurs in rural and urban India. This focused approach to commercial finance helps women entrepreneurs gain easier access to unsecured loans for businesses.
  • Priority Sector Loans
  • Under RBI regulation, banks are required to dedicate a percentage of all business funding to the priority sector, which is mainly composed of rural businesses involved in agriculture.
  • Banks offer loans for specific inputs, technology and processes required in the agriculture business. For example, tractor loans are offered to farmers who require tractors for harvesting activities.
  • Unsecured small business loans for the priority sector generally has lower, more affordable interest rates.
  • If you are qualified for priority sector, don’t forget to check “Yes” in your Unsecured Business Loan application.
  • Benefits

  • Quick turnaround time
  • Helps businesses grow and expand
  • Easy application and documentation
  • Unsecured Business Loan Interest Rates and Tenor

  • Unsecured Business Loan interest rates in India usually range anywhere from 18%-22%. There is a higher perceived risk by banks so rates for Unsecured Business Loans tend to be higher than that of other types of loans.
  • An Unsecured Business Loan in India typically has a tenor of 1 to 3 years.
  • Unsecured Business Loans Eligibility Criteria

    To be eligible for Unsecured Business Loans, an applicant must be representing any of the entities below:

  • Sole proprietorships
  • Partnerships
  • Private Limited Companies
  • The applicant must be at least 25 years of age.
  • Unsecured Business Loan Document Checklist
    Document Entity
    Sole Proprietorship Private Limited Company Partnership
    Individual Director Partner
    INDIVIDUAL
    Age & ID proof (any of the below):

  • PAN Card
  • Passport
  • Drivers License
  • Aadhar Card
  • Residence/Office Ownership (any of the below):

  • Electricity Bill
  • Sales Deed copy
  • Address Proof (any of the below):

  • Passport
  • LIC Premium (not over two months old)
  • Utility Bill (not over two months old)
  • Arms License (not over two months old)
  • Mobile Bill (not over two months old)
  • Last 12 months Bank Statement
    IT returns of last 3 Years
    Photograph with Signature
    Any other loan statements on books of owners/partners/director along with Sanction Letter.
    COMPANY
    Business continuity proof - 3 years income tax return & income statement
    Last 2 year audit report and audited Financials (debtors & creditors List a must)
    Last 12 months bank statements
    In case of transfer of loan: Last 12 months of loans statement along with sanction letter of previous bank
    Any other loan statements on books of companies along with sanction letters
    Last 12 months loans statement with sanction letter of any other existing loans
    Business incorporation date proof - PAN Card
    MOA(Memorandum of Association ) and AOA (Articles of Association)
    Latest share holding pattern on company letterhead
    List of Current Directors on company letterhead
    Certificate of Incorporation
    Partnership deed
    Certificate of Registration

    *Documents required for Trusts: Charity Commission Letter (in addition to company details)

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