The increasing availability of business loans and advances has simplified financing for entrepreneurs. From short-term funding options to long-term loans, and customised variations, these advances are available in all types and tailored requirements. Lenders also strive to make these loans and advances easy to avail through simple online processing and quick approvals. The availability of business loans without security has further simplified financing for ventures of all scales and ages.
These loans can be typically beneficial for new businesses to meet their financing needs as they do not require any asset collateral. You only need to meet the simple eligibility criteria set by your selected lender for easy approval of the advance. It is thus advisable to first check with your lender the required criteria and check if you fulfil them. As these are collateral-free advances, their availability hinges entirely on the fulfilment of such criteria. Hence, the need to fulfil all these requirements essentially. Given below are a few things to do for easy availability of a business loan without security.
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Things to Do to Avail a Collateral-free Business Loan
Meet the credit score requirement
As the loans are collateral-free advances, a lender must thoroughly assess the borrowing applicant’s creditworthiness. The foremost and reliable proof of one’s creditworthiness is credit score. It is a 3-digit number assigned to each individual based on their past record regarding loan repayment.
While the score range is between 300 and 900, you need to hold a credit score beyond the minimum threshold of 700 to be able to easily avail a business loan without security. Make sure that you have checked your score and taken the necessary steps for its improvement before applying for your unsecured business loan.
Apply with the necessary documents
You must also submit all the necessary documents as a proof of your eligibility for the advance. Make sure to check with your lender the documents needed so that you can arrange for them beforehand. Some of the necessary documents you would need to apply for a business loan without collateral include proofs of identity, address, income, and proof of residence.
Keep all documents ready before applying for hassle-free and fast-tracked processing of your loan application. For convenience, keep one soft copy each of these documents too as most online applications today involve online document submission as well.
Meet the minimum monthly income requirement
To satisfy the unsecured business loan eligibility, the lender also requires the borrowing applicant to meet a minimum monthly or annual income requirement to assure that they hold the necessary repayment capacity. Make sure to check the minimum income requirement with your financial institution as it can vary from one city to another.
Also, use a business loan EMI calculator to assess if the loan is affordable for you or not based on the repayment values such as the EMIs payable, the total interest payable, and the total loan liability payable.
Fulfil the occupational eligibility
You must meet the eligibility requirement related to your business stability as well to avail a business loan without security. Ideally, with a reputed lender, your business needs to be up and running for at least 3 years to be able to avail an unsecured business loan. Accordingly, you must provide the proof of business eligibility as well to your lender when applying for the loan.
Keep your previous repayment records straight
A business’s financial stability is also judged by the fact that if it has repaid in full any loans or advances availed or not. Alongside, such repayment must also be made by the due date every month and should not carry a high credit dependency to meet the business’s capital requirement. A high credit dependency makes the business’s borrowing profile risky, thus making it difficult to secure financing with ease.
Additionally, you must also check if there are other eligibility requirements that the lender needs the prospective borrower to meet for availing the loan with ease. When applying for your business loan without security, choose to go with the online application process as it is easy to complete and eliminates any need to step out of your home to access financing.
