Why Unsecured Business Loans are Becoming Popular

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Why Unsecured Business Loans are Becoming Popular
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A business big or small runs basically on the
working capital. The inadequacy of fund may
threaten the flow of operations and hinders
growth. The fund is needed for each and every
operation of a business entity.
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What Is An Unsecured Business Loan? Unsecured
business loans are collateral free loans which
are given on the basis of creditworthiness and
repayment capacity of a person. Unsecured
business loans are slightly costlier than the
similar collateralized loans.
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• Here Are The Reasons Which Make An Unsecured
  Business Loan Popular
• COLLATERAL FREE
• An SME financed through an unsecured business
  loan never requires giving any sort of security
  deposit.
• The feature of being unsecured makes it
  accessible for many young entrepreneurs who do
  not possess any asset.
• The need of collateral is excluded from unsecured
  business loan requirements.

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• FAST PROCESSING
• The processing and disbursal of this type of loan
  are very fast.
• The eligibility criteria for unsecured business
  loans are fairly relaxed.
• An SME owner who is stuck with certain monetary
  difficulty can get the capital faster.

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• SHORTER DEADLINE
• A shorter repayment schedule makes the borrower
  become debt free within a short time.
• It makes SMEs easy to plan their budget.
• Unsecured business loans give SMEs extra
  flexibility that makes capital gaining much more
  easier.

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• CREDIT RATING
• The credit rating of the organisation is one of
  the essential criterion's which is checked by
  banks and financial institutions.
• While sanctioning a general business loan but the
  same rules are not applicable to SMEs.
• Even an unsecured business loan can be used as a
  tool to improve the credit rating of the
  organisation as the tenure of unsecured business
  is comparatively low.

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• OPEN ENDED FINANCE
• Generally, unsecured business loans don't have
  any particular end date like any other loans.
• One can use the funds whenever it is needed in
  his business.
• Defaulting a business loan can attract penalties
  for the borrower.
• Even in the worst case, the lender can pursue
  legal action and put liens on your property until
  the debt is paid.

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• REUSABLE RESOURCE
• One can use any amount below the limit and repay
  the amount.
• This makes the balance of the credit unchanged.
  So he can use the same amount once again whenever
  he is in need.
• But the limit of a line of credit is set lower
  than secured business loans to lessen the risk of
  the lender.

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• UNRESTRICTED FINANCING
• An unsecured business loan is somewhat like a
  personal loan which is multipurpose.
• An unsecured business loan can be used for the
  purpose of the expansion of the business.
• But if you go for a secured business loan you
  one has to specify to the lender about the usage
  of the borrowed amount

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• CUSTOMISED SOLUTIONS FOR SME NEEDS
• Unsecured business loans are tailor-made loans
  exclusively for the Indian SMEs.
• There are various options from which one can
  choose the kind of business loan that meets his
  requirements.
• One can repay the whole borrowed amount at a
  single 'bullet' installment or in easy EMIs
  whichever he/she is comfortable with.

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Because of its numerous features and flexibility,
unsecured business loans are gaining popularity
among the SMEs. An unsecured business loan is one
of the best ways to gain capital when your
business is at an growing stage.