Why Unsecured Business Loans Are Gaining Popularity Among Small Businesses

The Covid-19 pandemic hit the world as hard as most historic catastrophes, and most businesses were swept away, or under by the crippling economic impact that came with it. No one was left untouched, but small and medium enterprises in financial turmoil were the most severely affected.

To offset the slump caused by the pandemic and make a full recovery, it has become crucial for them to find their feet fast. What small businesses need is quick capital support to iron out supply chain and working capital issues, before making a full recovery.

This is where low interest Business Loans come in, and there are many reasons more small businesses are going for them. These loans bridge the gaps between ideas and actualisation; they help enterprises leverage the market dynamics to increase revenue and cushion their business against small and significant blows alike. Let’s look at their benefits in detail:

The simplicity of process: With new age Non-banking Financial Companies (NBFCs) like Poonawalla Fincorp, one can secure a loan within a day. All you need is a simple online application and a pleasant meeting with the relationship manager about your business plan. You can go over the details and ideas you have, share your vision, get approval, and be on your way.

Protection and regulation: The small owners often needed loan sharks to get some capital into their flailing businesses at eye-watering interest rates, which proved very dangerous as loan sharks do not abide by rules to collect their money. But today, financial institutions providing you with Business Loans are well regulated, with SEBI and RBI keeping a system of stringent checks and balances.

Profit only in your pocket: With an unsecured Business Loan, you get to keep your profit, not the entity which loaned you the capital. Often an investor wants a part of the profit upon investing in your business. Not only that, but there is also constant meddling in your business affairs, and you must calm them in various ways. With these Business Loan benefits, you eat the whole piece of the profit pie.

No collateral: A small business owner does not always possess a handy asset they can provide instead of a loan. And when they do, they really wouldn't want to hedge their machinery, house, etc. Today, there are no-collateral Business Loans available for small businesses, and while they may come with increased interest rates, borrowers still have a lot of attractive offers to choose.

Low credit does not close doors: A business owner with a low credit score does not need to be ostracised from the lawful and regulated market. There is still a chance to secure a loan upon being assessed for their capability of paying it back. If your ideas and business have enough strength, they will most likely carry you over the line.

Flexibility in payment: The loan providers usually have a set policy on how a loan has to be repaid, but in the case of an unsecured Business Loan, you can decide the payment terms according to your cash flow and convenience. This is a huge plus because if you can timely pay off the loan, it improves your standing in the market and boosts your credit score.

Strengthens bonds: In the business world, your relationship and standing within the market matter and it’s not just about perception because as you repay your loan, you can always apply for more loans to broaden your business. A good relationship with the loan provider means the loans are processed faster and your business grows leaps and bounds.