Want a loan without security or collateral? Then you need to go for collateral-free loans. Collateral-free business loans are free from hassle and create limitless opportunities open to those benefiting them. Moreover, they not only assist us in achieving our corporate objectives, but they also assist us in meeting personal needs, such as wedding expenses, international vacations, further education, medical emergencies, and so on.
A collateral-free loan is a loan without any security, such as a car or house. The only security involved is repayment of the loan amount, so you will be free of any burden if the loan is not paid back. It is completely secured with the money or property pledged in the form of bank deposits. Interest-free loans are there in India, but most of them are used only for very short-term businesses. They are usually used for credit, cash flow, or frequent expenses.
If the business keeps running regularly for a while, it becomes the prime focus of the lender who arranges for long-term loans to grow the business. Relatively higher-interest-free loans are available in India, but the borrower always thinks about getting a collateral-free loan to fulfill his or her personal or financial requirements. State Bank of India is one of the most institutions that lend collateral-free loans to its customers. On the other hand, many start-ups and small businesses are taking loans from ICICI banks because of their simple and easy process. HDFC Bank is also one of the popular institutions that offer collateral-free loans because of its hassle-free process.
Why do small businesses consider collateral-free loans?
Collateral free business loans, unlike many types of loans, need no collateral. Therefore, there is no need for a guarantor, which gives the borrower complete and total freedom. Here are some of the advantages of this type of loan:
Easy process – Collateral-free business loans need the least amount of effort as compared to other business loans. Most people don’t have to fill out any loan application, and it is just like applying for a bank loan online. All they have to do is to provide their registration details.
Favourable interest rates – Collateral-free business loans offer better interest rates than traditional loans. As the name suggests, collateral-free business loans do not require collateral, and they offer much better terms of interest.
Are collateral-free loans worth it?
It is pretty beneficial to avail of collateral-free loans. It is a boon for individuals seeking financial freedom. It is also a smart choice if you need a loan for business purposes, for example, expanding your business or building a factory, acquiring a new property, or any other investment opportunity.
Collateral-free loans are usually cheaper than other loans that include one or more collateral. This means that people get the loan without giving back the collateral that the bank holds. That’s a lot of savings as collateral-free loans also remove the requirement of collateral. They also offer better repayment options than those with collateral.
Are collateral-free loans the best option for me?
To answer that, let’s have a look at the primary details of what a collateral-free loan is all about. A collateral-free loan is a one-stop loan in which the borrower doesn’t need to make any security deposit. It has proven to be beneficial for many companies. The loan repayment tenure is quite flexible, ranging from 12 months to 60 months. Their application process is also very easy and hassle-free. You can apply for these loans in a flash. Interest rates are also subsidised if you apply for them. One of the most important benefits of collateral-free loans is that there is no prior check of your credit history before its approval.
How to get a collateral-free loan?
If you have received a collateral-free loan recently, you know how complicated it is to obtain a business loan. You must save up a lot of money for the lender to pay you back, and the lender might take a long time to approve you. If you want to get a loan, you will have to save a lot of money and submit it to the lender. If you wish to apply for a collateral-free loan, there are few things that you need to know.
First things first! To get a collateral-free business loan, you need to register as a business. A registration fee may be charged from you along with the loan processing fees. Usually, you will be provided an offer letter with a unique ID to carry out a formal negotiation. In this course, your offer letter will explain your personal and business particulars. In addition, you will be asked to fill in your details, any existing loan payments, and the interest rates to be charged for the loan. Before you decide on getting a collateral-free loan, you must check your credit score and credit history. A credit score is an indicator of the financial health of a person and the ability to pay.
What are NBFCs?
NBFCs represent non-banking financial companies. Business inclines toward NBFCs for profiting reserves because of the adaptable advance terms and less rigid qualification models. Additionally, due to the various types of advances offered by NBFCs, it permits you to pick an advance meeting their requirements and reason. Some of the trusted NBFCs offering collateral-free loans include:
Money View: It is quite a systematic organization. Money View offers precise and customized solutions to its clients, making it one of the best institutions that provide collateral-free loans.
Fullerton: Fullerton is a one-stop structured and trusted financial service provider that lends quality collateral-free loans.
Kreditbee: It is one of the fastest-growing NBFC that lends collateral-free loans without any hassle.
NBFCs are, to a large extent, safe since they have been through the challenging phases of the country’s economic era. So, you can trust your NBFC for advancing funds for the business.
Conclusion:
Collateral-free business loans for small and medium businesses with less than one crore business assets are on the rise in the country. They offer incredible business opportunities to many small and medium businesses, as they save money in the long run. We need to be careful of many things when it comes to obtaining loans from banks. However, the above-mentioned information will enable us to make the most out of these different kinds of loans. As an entrepreneur, you should always be able to use the loans that you have at your disposal to get the things that you need the most.
