Banks and non-banking financial companies (NBFCs) in India offer unsecured business loans. The major goal is to meet the immediate needs of an expanding company. Most financial institutions provide term and flexi loans to meet a company's commercial needs. Commercial loans are another name for business loans. These loans are available to sole proprietors, privately held companies, partnership firms, self-employed persons, and shopkeepers..

Why Choose Business Loan.?

Business loans are the loans which are obtained without the use of any property as collateral for the loan are also termed as signature loan. These loans are the low risk one for the borrowers and are solely depends on the creditworthiness of the borrower. An unsecured business loan requires no collateral and the borrower do not need to pledge their asset in order to avail the loan. The lender here accepts the risk of default and has no legal rights to seize your property if you fail to pay back the loan. However, a strong credit history is must to avail this type of loan.

Secured Vs Unsecured Business Loan

A business loan can be secured or unsecured. Secured small business loans are the kind of loans that are backed up by security, generally valuable assets and items your business owns. This type of lending is often termed as asset-backed lending since the lending amount here is backed by assets. These loans come with lower interest rates, higher borrowing limits and longer repayment tenures. Small unsecured loans are those loans which are not backed by any asset. They do not require any collateral and hence there’s a higher risk for the lender. This loan is normally backed up by a business’s trading position. These kinds of loans come with higher interest rates, smaller amount and are given for a shorter period of time. Since you are not risking any valuable business or personal asset, the lender cannot seize any property or income in case of default on the loan. These loans are comparatively cheaper than the credit cards.