How Does One Get An Unsecured Business Loan For Self-Employed Individuals

Raising sufficient funds at the right time is one of the significant parts of running a business successfully. When you have an innovative idea for the expansion of your business, you must have the required amount to put that into action. For this purpose, you could rely on a business loan as these loans will provide adequate aid in purchasing equipment and appliances, meeting emergency requirements, expanding business, etc. Several lenders offer unsecured business loans for self-employed persons at attractive interest rates.  

Features and Benefits of Unsecured Business Loan for Self-Employed

Unsecured business loans for self employed individuals provide numerous features and benefits. Let us check out some of them here.

1. No Collateral Needed: When you avail an unsecured business loan, you don’t have to pledge a property or provide collateral to the lender. Such a business loan does not need any guarantee to be sanctioned, which reduces financial stress.
2. Minimum Requirements: Unsecured business loans demand minimum formalities and documentation. This hassle-free process helps meet the fund requirements and gets instantly approved.
3. Flexible Loans: You can get loan ranging from ₹10,000 to ₹50 Lakhs as an unsecured business loan depending on the type of business, its size, and your need. The loan tenure is flexible and starts from 1 to 5 years or more.

What are the Different Types of Unsecured Business Loans for Self-Employed

There are different types of unsecured business loans you can apply for if you are self-employed. Some of them are:

1. Term Loan: Unsecured business loans availed for a specific period at a particular fixed interest rate and paid back in EMIs are called term loans.
2. Loans under Government schemes: The Government of India offers several unsecured small business loans at comparatively smaller interest rates. Some of them are Stand-up India Start-up Scheme, Mudra loan (PMMY), Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), Prime Minister Employment Generation Program (PMEGP), SIDBI’s Loans in 59 minutes, etc.
3. Working Capital Loan: Unsecured business loans which are approved depending on the creditworthiness and repayment capacity of the applicant and can be availed to meet day-to-day expenses in a business are called working capital loans.  
4. Micro Loans: Small loans ranging from ₹5,000 – ₹ 2 Lakhs offered by Micro Finance Institutions (MFIs) to meet the applicant’s instant cash requirement are called micro loans.  
5. Business Credit Cards: The applicant who runs a business can take unsecured business loans against their business credit cards. The loan amount depends upon the credit card limit sanctioned by the lender and can vary from person to person.  

Who can Apply for an Unsecured Business Loan for Self-Employed

Usually, the lenders offer unsecured business loans for self-employed individuals who are professionals like Doctors, Engineers, Chartered Accountants, Company Secretaries, Architects, etc. Non-professionals like Traders, Vendors, Retailers, Manufacturers, Distributors and Wholesalers can also apply for business loans.  

What are the Documents for an Unsecured Business Loan for Self-Employed

Here is the list of documents you need to get unsecured business loans for self-employed.

• Duly filled Application Form  
• Identity Proof - Passport, Aadhaar card, PAN card, Voter ID card, Driving Licence, etc.
• Address Proof - Voter ID card, Aadhaar card, PAN card, Ration card, Utility bills like phone Bill, electricity bill, etc.
• Income Proofs - Last two years’ ITR and Certified Profit and Loss Statements
• Any other documents required by the lender
• Two passport size photographs

How to Apply for an Unsecured Business Loan for Self-Employed

Self-employed individuals can get a business loan without providing any collateral. The principal amount granted will depend on the business you own and the relationship you have with the bank. The business loan interest rates will vary from lender to lender. However, it starts from 10.00% per annum and extends up to 24% per annum. You can take up to ₹50 Lakhs as an unsecured business loan for self-employed. Here are the steps you should follow.

Step 1:    Visit the lender’s official website and check whether you fulfil the business loan eligibility criteria.

Step 2: Click on the ‘Apply Now’ option and open the application form.

Step 3: Enter the basic personal and professional details.

Step 4: Verify your registered phone number by entering the OTP sent to your mobile number.

Step 5: Upload the necessary documents and submit the form.  

Step 6: Once these documents are verified, an executive will contact you regarding the business loan application and help you through the further process.  

The majority of the banking and financial institutions in India offer unsecured business loans to their eligible customers. The interest rates, maximum principal amount, and eligibility criteria shall vary from lender to lender. Now, you must have understood everything about availing an unsecured business loan from any lender.

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