Seeing a start-up grow into a successful enterprise
is a dream for every entrepreneur. However, finance is one of the hardest
challenges hindering this transition. Getting a secured Business Loan from a
loan provider can be difficult when the start-up is small and needs assets.
Putting your savings or property at stake for business growth is a big concern
for small and medium-sized entrepreneurs. That is why collateral-free Business
Loans are gaining immense popularity in the SME sector. Kotak Mahindra Bank is
one of the most reputable organizations offering collateral-free Business Loans
of up to INR 1 Crore. Let’s explore how to apply for a Business Loan without
security.
What is a Collateral-Free
Business Loan for SMEs?
Collateral is an asset, property, valuable, or
tangible possession that you can pledge as security to a financial institution
when obtaining loans. When you borrow a loan from a finance company, they
expect a source of security that they can legally use to recoup their money if
you default. Finance organizations like Kotak Mahindra Bank have
started offering unsecured Business Loans where they do not demand any
guarantee against the loan. To qualify for an unsecured loan, you must fulfill
their Business Loan eligibility criteria and provide the
necessary documents to complete the procedure.
Benefits of Borrowing a
Collateral-Free Business Loan
Collateral-free Business Loans are favorable for
borrowers and easier to process for lending institutions. Here is how they
benefit everyone involved:
● Faster Loan Approval: Providing
collateral against a loan means more documentation and formalities. Loan
providers take longer to process them. Conversely, when you apply for a
Business Loan without collateral, they obtain faster approvals due to
minimal documentation and formalities.
● Build Credit History: A
poor credit history can seriously impact your Business Loan eligibility in
the future. Unsecured Business Loans have flexible repayment terms. That means
you can repay the EMIs at your convenience, improving the chances of timely
repayment and letting you build your credit history more effectively.
● Avoid Risk to Personal and
Business Assets: When you borrow a secured loan and fail to repay it
on time, the lender has the legal right to seize your property and recoup your
money. You must have heard several horror stories when corporations lost their
assets to unpaid loans. An unsecured Business Loan is the best way to obtain
financial support without risking assets.
Tips to Obtain a Collateral-Free
Business Loan at the Lowest Interest Rates
Obtaining a collateral-free Business Loan requires
strategic preparation and careful actions. Following are a few tips to improve
your chances of getting an unsecured loan at favorable terms:
● Building and Maintaining a
Strong Credit Score: Check your business and personal credit ratings
and ensure they are up-to-date and accurate. Pay existing bills and EMIs on
time to build a robust credit history. Paying off outstanding debt and reducing
credit utilization will also help.
● Improving Business
Financials: Prepare financial records and maintain organized
statements. Show positive profitability and revenue to boost your Business
Loan eligibility. Demonstrate a consistent cash flow indicating your
repayment capacity.
● Create a Wide-Ranging
Business Plan: A comprehensive business plan includes your financial
projections, strategies, and company goals. Also, explain how you plan to use
the loan amount to generate revenue and facilitate business expansion.
● Shop Around and
Negotiate: Compare unsecured loan plans and look for the most
competitive terms and rates. Reputable loan companies like Kotak Mahindra offer
competitive interest rates and have quicker approval procedures. Negotiate the
loan terms, including repayment plans and interest rates, to grab the best
deal.
● Prepare a Strong
Application: When you apply for a Business Loan, ensure
your application is accurate, complete, and well-documented. Highlight your
financial stability, loan purpose, and business strengths. In case of a poor
credit history, consider using a guarantor or co-signer to enhance your
eligibility.
Steps to Apply for a Business
Loan at Kotak Mahindra
Applying for a collateral-free Business Loan at
Kotak Mahindra is simple and quick. Follow these steps to apply:
- Visit the official Kotak website.
- Hover the mouse
over ‘Loans’ on the top, hover over ‘Other Loans,’ and click ‘Business
Loan.’ - Click on ‘Apply Now.’
- Select Yes or No if you are an existing Kotak
customer or not. - If yes, enter your registered mobile number, date of birth, or
CRN, enter the captcha, and click ‘Continue.’ - If not, enter details like your
name, mobile number, PAN number, business vintage, annual turnover, loan
amount, etc. - Agree to the ‘Terms and Conditions’ and click ‘Apply Now.’
- A
customer representative will get in touch with you soon.
Conclusion
The advantages of an unsecured Business Loan include quick approval, flexible repayment options, an opportunity to build credit, asset risk mitigation, and easy access to the required funds. You can apply for a Business Loan of up to INR 1 Crore at Kotak Mahindra Bank. Overall, these loans contribute to the development of start-ups by providing them with accessible funding options without putting valuable assets at stake.
