There is so much uncertainty involved in a business that sometimes it compels you to borrow funds. The business loan comes in two forms secured and unsecured. An unsecured business loan refers to a loan that does not involve any collateral or guarantee. This eliminates your risk as a borrower to lose your assets or guarantee in case of default payments. This is a flexible way to arrange your cash in a faster manner whenever you need it to run your business.
You would make every effort in your business so that it can expand and prosper to new heights. Whether you want to augment your market base or purchase state-of-the-art equipment, update your current system of production, or just need it to solve your working capital requirements, unsecured business loans fulfill the purpose. This type of loan is designed to serve the diverse needs of businesses.
Unsecured business loans come in various forms.
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Term loan or installment loan
This type of unsecured loan is given for a particular period, and you must pay your monthly repayments within that period. You can get it on a short, intermediate, or long-term basis. The repayment period varies from 12 months to 5 years. You could borrow as much as 2 crores with a term loan.
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Working capital loan
This type of unsecured loan helps to run the routine affairs of a business. It is given after analyzing the borrower’s credit profile and his repayment ability. This is primarily taken as a short-term loan, and you can get as much as 40 to 50 lacs. The repayment period could be shorter or longer depending on your convenience. The lender will decide a limit for you and the amount you will borrow will be strictly used for working capital requirements only.
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Overdraft loan
This type of unsecured business loan is offered in the form of a credit limit by the lender. As a borrower, you will use the amount in installments. The interest rate will be charged on the used amount. The sanctioned limit is often based on factors such as how good your relationship is with the lending organization, your credit history, repayment history, the amount of cash flow of your business, etc. Every year your limit will be reassessed, and you can use it if you pay the interest on time.
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Loans under government schemes
With the objective to help small business entrepreneurs, the government has also offered some loans with low-interest rates. Various lenders offer these loans at different locations in the country. If you want to apply for this type of unsecured business loan in Bhopal, you can check it online. You can borrow from 1 lacs to 5 crores as per your business needs.
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Revolving credit
This involves offering a credit limit within a certain period. The borrower can withdraw the amount at any time within the specified limit. This means the borrower is not restricted to paying back in monthly installments. Once the credit limit is finished, as a borrower you will need to pay it back.
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Consolidation loan
This type of loan is often taken to repay the outstanding debt such as a credit card debt or other forms of existing debt. This will help you streamline your existing debts into one big debt. So, with a single monthly repayment, you can manage your expenses well. This is a popular practice among business owners to consolidate various small loans into one loan to lessen the burden.
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Merchant cash advance, MCA
It is an interesting cash gain process designed for small businesses. As an agreement between you and the lending company, you will get a lump sum amount to run your business and in exchange, you will repay the amount based on the future payment you receive on your credit card or debit card. This means when you receive payments from your customers on your credit card or debit card, you will comfortably make the repayments. The advantage of this facility is that you can get instant cash and avoid heavy monthly installments.
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Micro loans
This type of loan helps small business owners to fulfill their short-term instant cash requirements. You can get loans starting from 5000 to 2 lacs depending on your requirement.
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Business credit cards
This facility is given based on your business credit card. This can be called a credit line offered by the lender which helps you as a business owner to run your working capital requirements.
Wrap up
While obtaining an unsecured business loan, you must ensure you get the best interest rate and a comfortable repayment period so that it does not give you stress at the time of paying back the loan. Whether you are looking for an unsecured business loan in Bhopal or any other location in India, you just need to find a good lender who offers this loan at a great interest rate and flexible repayment periods.
