Mitigating Risks For Startups And Small Businesses

Businesses today operate in extremely competitive global environments, often leading to bumpy journeys, punctuated with kinks in the cash flow. Sometimes the challenge is the need to continuously upgrade technology in order to stay relevant. Sometimes, the challenge is meeting regular expenditure due to delayed payments or bleak market conditions. Today, fortunately, it is relatively easy to raise a small business loan from a registered NBFC or bank, like IIFL Finance, with limited paper-work and quick approvals to help businesses overcome such challenges .

Perhaps one of the most useful features of a small business loan offered is the fact that you can avail of it as an unsecured business loan. This is especially useful if your business is young or service-oriented, with limited or no assets to pledge as security against the loan raised. The unsecured business loan can be used for a variety of purposes – to buy new machinery or upgrade existing one, office renovation or expansion, meet regular business expenses like salaries or purchase of raw material during a cash flow issue, to travel to meet clients, marketing and promotion, or any necessary business expenditure.

Another reason why the unsecured business loan seems to make logical sense, is that in case there are severe and unexpected disruptions in the business operation, making it impossible for you to repay the loan, you will not have to forego a business or personal asset in case of non-repayment. If the loan had been a secured loan, you would have had to surrender the pledged business or personal asset. In the case of non-payment of unsecured loans, the lender may however approach the courts for relief and intervention, following which you will have to abide by the decision of the court.

While the attractive feature of such business loans is that it does not require collateral, this also means that the unsecured business loan interest rate is higher than secured business loans. Lenders charge a higher rate in order to cover the risks associated with the lack of collateral. Your personal or business credit score influences the interest rates as well – a good credit score means that you will be offered more favourable terms of interest.

The small business loans offered by most banks and NBFCs provide loans ranging up to INR 50,00,000/- or more. IIFL Finance also offers unsecured business loans up to INR 30,00,000/-, subject to meeting the required criteria of being a sound business, operating in a sound environment, having good credit ratings etc. In addition, you need to have a convincing business plan, where you can demonstrate how the loan will help you earn greater profits, and bring in the cash-flow necessary to repay the EMIs as per the loan agreement.

It is relatively easy to apply for a small business loan today. Most banks and NBFCs offer the facility of online applications. The documents necessary vary from lender to lender. These usually include the KYC documents of the business, the borrowers or partners, PAN Cards, bank statements of 6 to 12 months and business registration documents, if any. For bigger loan amounts, a sound business plan is a must. The loan can be availed entirely online, without having to visit the lender’s office in most cases.

Thus, if you think an injection of cash can give your business a significant boost, improve product quality and profitably, you should consider the unsecured business loans offered by several banks and NBFCs. Fortunately, today most of the information is available on lenders’ websites making it easy to do the necessary research and comparisons. In order to decide which lender is offering you the best terms and conditions, make a comparative chart and note down interest rates, tenures, loan amounts, repayment schedules and other terms and conditions. In case you need further clarifications, most lenders also offer you the facility of a call back. If you are in need of an unsecured business loan, begin your research to find out who can offer you the best unsecured business loan right away. Do check out the online business loan offered by IIFL Finance - a comprehensive product, offering quick funds with affordable interest rates.