New Businesses require a massive amount of capital. Being a business owner, you can fulfil this necessity for money by getting business loan for new business. When exploring, you can find several business loans without collateral or security that will help grow your venture to the heights of success. Many banks, financial institutes, and NBFC’s in India offer these loans, which can efficiently solve your capital problem, and you can focus on expanding your enterprise.
Unsecured loans:
You may have heard the term unsecured loans have many times. An unsecured loan means getting credit for your venture or effort without any security needed. When a lender gives you a certain amount of loan at a fixed rate of interest without pledging any collateral, termed as an unsecured loan. Basically, a person with having CIBIL score above 700 can effortlessly get an unsecured loan. Because the lender can determine the eligibility by analysing your CIBIL score, past payments, etc.
Coming to the primary question arises about the risk factor, repayment, and interest rates at which an unsecured loan is offered.
All these points are discussed below:
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Risk Factor:
It is the moral responsibility of any person taking without collateral loan for business should repay them on time. It will help maintain a sound CIBIL score and ensure easy eligibility for loans in the future. If you don’t repay your loans or continue your default for continuous 60-90 days, in that case, it will be transferred to collection agencies for the recovery of the loan amount. And it will create a mess in your life. To avoid all these things, is it better to repay the same on time.
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Repayments:
The Repayments for unsecured loans are done monthly in easy instalments within two to seven years. The repayment time generally depends upon the lender and borrower’s understanding.
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Rate of Interest:
Unsecured loans are generally available with a fixed interest rate varying from 6% to 36%. Besides, it also depends on many factors like CIBIL score, past payment records, etc. So, the better is your CIBIL record, the lower will be the interest rate; vice versa.
Tips to effortlessly get Unsecured loans are:
- Improve credit repayments
- Make a master business plan and convince the lender that your vision will be successful.
- Choose a good and trustworthy lending company.
However, you can fetch business loans from private lenders, financial institutes, NBFC’s, etc.
Government Initiatives for a business loan for new business:
These days government is also taking many initiatives to give collateral-free loans for start-ups and new businesses.
Some of the Schemes are as follows:
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MUDRA loan under PMMY:
Micro Units Development and Refinance Agency (MUDRA) is the scheme launched under Pradhan Mantri Mundra Yojana (PMMY) by the Hon’ble Prime Minister on 8th April 2015, providing loans up to 10 Lacs to non-corporate, non-farm small/micro-enterprises. These loans are provided by financial institutes, banks, NBFC’s, etc.
The Scheme is divided into three categories as follows:
- Sishu:
This category of businesses is eligible to fetch credit up to Rs. 50,000 and meant solely for new ventures and start-ups.
- Kishore:
Any SME can obtain a credit of above Rs.50,000 and up to Rs. 5 lacs under this program.
- Tarun:
If you have a start-up, your business is eligible for above Rs 5L and up to Rs. 10L.
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Start-Up India Scheme:
Start-Up India Scheme is meant to provide financial aid to SC/ST and women nationwide without collateral loan for business. Under this plan, one can get loans up to Rs. 10L to 1cr., so that any woman or SC/ST can settle with any manufacturing or service or trading unit. The tenure of these loans is generally for 7years, which comes with easy instalments on a monthly basis.
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Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)
Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) was the initiative by the government for new and existing businesses. An individual can avail of an amount of Rs. 1cr under this plan, and all this is without any collateral security. Many financial institutes are in India, such as banks, Regional Rural banks under the category of National Bank for Agriculture and Rural Development (NABARD), etc., offer this loan to an individual business person. So, any business owner can get this loan smoothly and effortlessly.
However, the Government of India generally offers these business schemes mentioned above to promote start-ups firms. These schemes are very beneficial to start a new business without collateral security.
Conclusion:
Collateral free Business loans for new business have become an essential part of all industries that helps people easily expand businesses without any collateral with the help of government schemes, private institutes, NBFC’s, money lenders, etc. You can easily avail of this business loan option with a good credit record and furnishing all your documents.
