Small business and SMEs often have to face a shortage of funds required for adequate growth of the business. Traditional lenders like banks require collateral security to process business loans and small business are not sufficient enough to furnish the same. Apart from collaterals, the lengthy processing and documentation which comes along traditional lenders are a hassle for small business owners.
Digital lenders like Indifi are changing the face of business loans by providing short term loans which are flexible in terms of repayment, interest rates and have a quicker disbursal of cash. They do not seek any collateral which is a plus point for many SMEs. Unsecured business loans without collateral security are a blessing for small business owners who are in ardent need of cash inflow. Here are some of the reasons to look for unsecured loans from digital lenders.
NO COLLATERAL REQUIRED
Collateral security can make business loans risky for financial lenders but it considerably increases the risk for business owners who are on the verge of growing their business. Collateral is a property or asset which is kept with the financial institution to secure the loan in case of a non-repayment capacity of the borrower. Unsecured business loans do not require any collateral and thus there is no risk involved in your personal assets in case of loss to the business.
EASIER TO QUALIFY FOR
Unlike secured business loans, unsecured loans have been designed so that they’re easier to obtain. Many digital lenders like Indifi are providing unsecured loans in India which are customized as per the borrower in terms of repayment and interest rates. Traditional lenders, on the other hand, have stringent lending criteria which keep the pressure on the borrowers throughout. There are various regulations and rules along with lengthy processing, documentation which makes the chances of qualifying meagre in the case of traditional lenders.
QUICK APPLICATION AND APPROVAL
Unsecured business loan approval is quicker and a borrower may get his loan application approved within just 24 hours if all documents are complied with. Many small business owners seek fast disbursal due to funds crunch which is possible with unsecured loans. Traditional lenders take a long duration for approving a loan and that too if all the documents and analysis are met through.
Additionally, in secured loans, the business owner may be required to sit down with the lending parties multiple times before the loan gets approved. This wastes a lot of time. Unsecured loans are easy in terms of quick online application which can be done at any hour from the comfort of your home. This way, business owners can focus on running their business.
A LESS THAN PERFECT CREDIT HISTORY IS ACCEPTABLE
Secured loans take into account the credit score of the applicant and high weight. Digital lenders like Indifi are more inclusive in their approach with their main focus on helping small-medium enterprises. However, the interest rate which is offered is a reflection of the risk which the lender is taking. Thus, a business with a strong credit history is offered more competitive interest rates. Personalisation is thus a key advantage of unsecured business loans.
Flexibility goes hand in hand with unsecured loans. Digital lenders like Indifi give enough leverage to the small business owners in terms of repayment of their loan. Repayment is also customisable depending upon the sales. For Retail businesses, POS system is highly helpful in such scenarios wherein borrowers get an amount deducted on daily basis or weekly basis from their accounts on the basis of their sales and similarly for other businesses the repayment can be integrated with revenue.
Also, the business owners have full liberty and no interference from the lenders in the context of usage of funds. The business owners can use the funds for expanding their operations, inventory, marketing, recruiting staff, making payments or anything else. They can use the funds in whichever way they feel. This is in contrast to the secured loans where you have to use the loans for the purpose for which you are taking it.
Thus, unsecured business loans are everything which the business owners should contemplate to get.