Ways to Avail of Business Loans Without Collateral

Businesses need funds to continue their day-to-day operations. It is particularly true for start-ups, which require a constant money supply to grow and develop. India is home to many start-ups; its start-up ecosystem ranks the third-largest in the world. Many start-ups in India failed due to the lack of adequate funding. It has led to the government intervening to provide the much-needed funds to the right start-ups without any collateral requirement. This article will discuss how a start-up can avail of a business loan without collateral from government schemes or other sources such as CLIX Capital.

Government Schemes for Business Loans

The Government of India (GoI) has launched the following schemes to foster the growth of start-ups in India:

  1. Pradhan Mantri Mudra Yojana (PMMY): This scheme provides loans up to Rs. 10 lakhs to non-farm-related small and micro-enterprises. The plan has classified the various enterprises into three product groups; Shishu, Kishore, and Tarun, depending upon their funding requirements and business stage.
  1. Credit Guarantee Fund Scheme (CGFS): This scheme seeks to provide micro and small enterprises with collateral-free loans or credit facilities. This scheme facilitates working cash flow and term loans up to Rs. 100 lakhs.

Get a Loan for Start-ups without Collateral 

Another easy and quick source of funds is Non-Banking Financial Companies (NBFCs). You can get an unsecured loan with the following features:

  • No Collateral: NBFCs furnish business loans with no collateral requirement.
  • Loan Amount: The loan amount offered varies according to the business seeking the loan. The loan amount ranges between Rs. 5 lakhs to Rs. 50 lakhs.
  • Minimal Paperwork: They require minimum documentation for the loan application process. These typically include proof of identity, residential proof, financial documents like P&L statements, proof of ownership, etc.
  • Flexible Repayment Options: Such financing institutions provide businesses access to loans with flexible repayment tenure ensuring that businesses can access and repay their loan amounts according to their timeline.
  • Loan Types: A variety of loans are available with the NBFCs. Businesses can avail of business loans as per their needs.

CONCLUSION:

Start-ups can access the schemes of the Indian government if they qualify. It is generally preferable as the government provides many benefits and opportunities to foster the start-up ecosystem in India. However, this can sometimes be a time-consuming process. If you need a business loan, NBFCs can also be an excellent option. Start-ups need large funds, particularly during the inception phase to grow and expand. They can access their fund requirements by availing business loans. Clix Capital offers collateral-free business loans to start-ups with turnover exceeding Rs. 1 core.

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