Business loans are a very common financing option used by businesses of all kinds and sizes. From buying new equipment to acquiring funds for business growth and development, or simply managing adequate cash flow for the business, there are a variety of reasons why a business may need to go for a business loan. Although, when you are looking to get such a collateral free loan, the first thing is to check the unsecured business loan eligibility.
Business loans are primarily of two kinds:
- Secured business loans where there is a collateral needed for the loan. This can be a business asset, real estate property, etc. and it serves as the security of the loan.
- Unsecured business loans which do not require any collateral for getting the loan approved.
Unsecured business loans are generally preferred by small businesses and startups as such businesses often do not have much business assets to be put up as collateral for a secured business loan. However, in today’s time, such collateral free business loans are very easily available. Numerous banks, finance companies and other lenders offer collateral free business loans to small businesses and startups.
How To Get An Unsecured Business Loan: Eligibility and Other Important Factors
Based on the needs of the business, you will need to choose the kind of unsecured business loan you will apply for. There are a few common types of collateral free business loans available in the market. They are:
- Business credit cards
- Merchant cash advance
- Short term online business loans
- Long term online business loans
If you have your needs figured out and you know the kind of loan you need, the next step would be to choose a lender. This would be based on the kind of offer they have for you. Go for a lender that offers low interest rates along with flexible repayment methods and a long repayment tenure, even if you want to pay back the loan on a short-term basis.
Unsecured Business Loan Eligibility and Documentation
While unsecured business loan eligibility varies from lender to lender, there are some basic requirements and documents needed by all of them. Let us check out the basic eligibility criteria and documents you need to apply and qualify for such loans.
- The applicant must be over 21 years of age. The age limit to apply for such loans is 21 years to 70 years. (70 years is the maximum age at the time of maturity of the loan.)
- The applicant must be a resident of India.
- The business must be operating for at least 3 years.
- A good credit score and credit history is also looked into by most lenders. A CIBIL score of 700 and above or at least 685 is good enough for qualification.
You need to have the right documents ready for submission when you apply for such a loan. Here’s some of the basic ones you need:
- Application Form: A properly filled up loan application form with one passport size photograph.
- Applicant’s Identity Proof: Aadhar Card, Passport, Photo PAN card, Voter’s identity card, Driving license.
- Proof of Residence: Ration card/Telephone Bill/ Lease agreement/ Electricity Bill/ Sales Tax certificate/Passport/Trade license.
- Proof of Age: PAN card, Voter’s Identity card, Aadhar Card.
- And Proof of business ownership
- Financial Documents: Copies of IT returns for the last two years along and bank statements for 6 months.
That’s all the basics of unsecured business loan eligibility and documentation. Talk to the support team of the lender you choose or visit their website to get a complete list of eligibility criteria and documents needed for such a loan from that lender.