Unsecured Business Loans
An unsecured business loan is a type of financing that does not require the borrower to provide collateral to secure the loan. Instead, the lender evaluates the creditworthiness of the borrower and the strength of the business to determine the likelihood of repayment.
These types of loans are typically used by small business owners who do not have assets to pledge as collateral or who do not want to put personal assets at risk. Unsecured business loans can be used for a variety of purposes, including working capital, expansion, purchasing inventory or equipment, or to cover unexpected expenses.
However, because there is no collateral, unsecured loans are considered higher risk by lenders, and as such, they often come with higher interest rates and stricter qualification requirements. Borrowers typically need to have good credit scores and strong business financials to qualify for an unsecured business loan.
In summary, unsecured business loans can be a viable option for small business owners who need financing but do not have assets to use as collateral. However, it's important to carefully evaluate the costs and risks associated with these loans before applying.
Following are categories of Unsecured Business Loan Products by various Banks, NBFC & FinTech's
GST Return Program - Under this program applicant eligibility is assessed based on organisation turnover delared under GST return. An industry standard rate of return is applied to assess the return of from business and accordingly eligibility is derived by reducing current obligations. Along with GST returns other things such as banking should justify the Volume of business.
Banking Surrogate Program - Under this program applicant eligibility is assessed based on average credit bank balance maintained by the applicant.
ITR program - Under this program applicant eligibility is assessed based on Income tax return filed.
Under all the above programs applicant CIBIL score, previous history as borrower plays an important role.