If you need a business loan but don’t want to put up any collateral, an unsecured business loan could be just what you need. Unsecured loans are a great funding option for businesses that don’t have many assets, businesses that don’t want to offer security, or any rapidly growing company that requires funding quickly.
Earlier, it was difficult for small and medium-sized businesses in India to obtain funds for growth and expansion. If you were a small business owner with no collateral or assets, your chances of obtaining a business loan from traditional lending institutions such as banks were slim.
However, with the rise of FinTech, next-generation lending platforms such as Kinara Capital provide business loans aimed at MSME owners. The main difference between these and regular business loans is that these loans are unsecured. You do not need to submit any collateral as a business owner to obtain unsecured business loans.
Benefits of Taking an Unsecured Business Loan
1. Positive Working Capital
Working capital is essential for all businesses to run day-to-day operations smoothly. Small businesses often find it difficult to maintain positive cash flow due to unstable customer payment schedules, outstanding bills, and other operational expenses.
Unsecured business loans serve as a cash buffer, allowing you to meet your daily expenses with ease, such as paying salaries, stocking inventory, paying suppliers, and so on. Doing so enables you to focus on long-term growth with an unsecured business loan rather than being constrained by short-term funding requirements.
2. Aids in Fueling Growth
If you want to take your small business to the next level, expand beyond current markets, and launch new products, you’ll need money. With an unsecured business loan by your side, you can take the risk and make the most of any growth opportunities that come your way.
3. Improves Credit Score
If you want to improve your company’s credit rating, an unsecured business loan from lenders like Kinara Capital is an excellent option. Repaying the loan timely does wonder for boosting your credit score. With a high credit score, you may be able to get lower interest rates on future loans.
4. Quicker Disbursals
Online lenders like Kinara Capital have almost become synonymous with a quick approval process—often in less than an hour. And, once approved, the funds can be in your account in as little as 24 to 48 hours. So, if you’re looking for capital to make the most of a business opportunity that requires you to act quickly, it might be a good fit for your company.
Types of Unsecured Business Loans and How You Can Use Them
The holiday season is an excellent time for the market to thrive. This period has some of the highest business sales and earnings. This increase is especially beneficial to MSMEs because they can easily profit from the market’s growing demand and cash in sales. Another aspect of the holiday season is the increase in demand for goods and services.
During the holiday season, the rate of sales and purchases remains at an all-time high. Because of the increased demand, business owners make every effort to increase production. This increase in output will undoubtedly necessitate additional capital for equipment and essential machinery stock. A business loan is a viable option in this situation. There is no need for the business owner to invest from their own pocket with the help of an unsecured business loan.
Among many others, the following are the two most popular types of unsecured business loans:
1. Working Capital Business Loan
Working capital refers to the funds used to run a business on a day-to-day basis. A company may be unable to function efficiently if it does not have a free flow of working capital. You can choose to take a working capital business loan to ensure your business runs smoothly.
2. Asset Purchase Business Loan
An asset purchase loan allows you to purchase new or used machinery, increasing your business productivity, product quality, and turnover. Lenders like Kinara Capital offer collateral-free business loans to help you expand your small business considerably.
So, this festive season aim high with unsecured business loans!