Unsecured Business Loans in India: Types, Eligibility & More.

Key TakeAways 

• Unsecured business loans are ideal for small businesses.
• Businesses can choose from various types of unsecured loans.
• Fintech Lenders Like BigMudra offer quick processing of unsecured loans.
• Eligibility depends on the business turnover and credit worthiness. 
• Unsecured business loans are more flexible than secured loans. 

Running a business in India today means going through countless financial challenges. Whether you are a startup owner or a well established MSME owner looking to expand your business, access to quick business loans remains one of the biggest hurdles. Traditional secured business loans often require property or asset collateral that many entrepreneurs simply don’t have or they don’t want to risk it. 

That is where unsecured business loans come in handy. These loans have turned out to be a lifeline of small companies in India right from the congested markets in Mumbai to the upstart ecosystems in Tier-2 cities.

If you are looking for a quick business loan, Unsecured business loan is a perfect option to go with. Unlike traditional bank loans that can take weeks or months to process, these loans can be approved within 24 – 48 hours. Here In this blog, we will dive deep into the types of unsecured loans, its benefits, and eligibility criteria for unsecured business funding. 

What Are Unsecured Business Loans?

Unsecured business loans are loans provided without asking for any collateral or asset as security. Unlike secured loans where you must pledge property, machinery, or other valuables. Unsecured loans are offered purely on the basis of your business performance, turnover, and creditworthiness.

These loans are mostly provided by NBFCs (Non-Banking Financial Companies), fintech platforms, and a few private sector banks.

Who Can Apply?

• Startups and early-stage businesses
• Freelancers and service-based professionals
• MSMEs with limited physical assets
• Retail businesses with a steady cash flow

Types of Unsecured Business Loans in India

There are several types of unsecured small business loans available in India, depending on your business needs and repayment capacity. Here are the most common ones:

1. Working Capital Loans: Short Term Loans mainly used for managing everyday expenses such as inventory, salaries, or utility bills. 
2. Line of Credit: A revolving credit line that you can use, repay, and reuse based on your business needs. Great for managing unpredictable short-term requirements. 
3. Invoice Discounting: you can get advance payment based on the pending customer invoices. 
4. Business Loans For Startups: Specifically designed loans for newly launched businesses. Startups often require less paperwork and flexible terms. 
5. Merchant Cash Advance: you can get merchant cash advance on the basis of your future card swipes or digital sales. 

Each of these loans serves different purposes and can help businesses scale without collateral.

Benefits of Unsecured Company Loans

Unsecured business funding comes with several advantages, especially for businesses that are light on physical assets or don’t want to risk their property.

Key Benefits:

• No Collateral Required: You don’t need to mortgage your home, office, or land.
• Quick Approvals: Many fintech lenders approve loans within 24–72 hours.
• Minimal Documentation: Most platforms ask only for KYC documents, bank statements, and ITRs.
• Helps Maintain Asset Ownership: You keep full control over your assets while growing your business.
  

Unsecured company loans are especially helpful for startups and MSMEs that want to build without risking their hard-earned assets.

Unsecured Business Loan Eligibility Criteria

Each lender has slightly different criteria for offering unsecured loans, but most follow these common unsecured business loan eligibility criteria:

Maintaining a healthy cash flow, good banking history, and digital transaction records increases your chance of approval.

What Are the Interest Rates on Unsecured Business Loans?

The interest rates of unsecured business loans are normally higher as compared to the secured loans because they are more risky to the lenders. The available interest rate is between 10% to over 25% per annual rate depending on several factors such as your credit history, business sales and policies implemented by the lending institution.

Several factors influence your interest rate:

1. Credit Score: A higher CIBIL score can significantly reduce your interest rate. Borrowers with CIBIL scores above 750 often qualify for the lowest rates offered by lenders.

2. Business Turnover: The stronger business performance is indicated by higher monthly turnover that can be used to negotiate better rates. Lenders are favorable to businesses whose growth has a steady pattern.

3. Business Vintage: Established businesses with longer track records typically get better rates than newer ventures, as they represent lower risk to lenders.

4. Lender Type: NBFCs and fintech lenders can use competitive rates as a way to win the market share or traditional banks can use higher rates along with other advantages such as relationship banking.

5. Loan Amount and Tenure: Larger loan amounts and longer tenures might qualify for better rates, as they represent more profitable business for lenders.

Digital Payment Trails: Companies that have a good history of digital payments and good GST compliance are also projected at lower rates since it portrays a component of transparency and reduced risk.

Who Offers the Best Unsecured Business Loans in India?

With the fintech revolution in full swing, many lenders in India now provide quick and paperless unsecured business loans.

Here are some of the top platforms:

Lender	Loan Amount	Turnaround Time	Interest Rate
BigMudra	₹1 Lakh – ₹5 Crore	Within 48 hours	From 10.99% p.a.
LendingKart	₹50,000 – ₹1 crore	2–5 business days	From 19.20% p.a.

Many of these platforms also offer a fully online process from application to disbursal.

When to Choose an Unsecured Loan Over a Secured One

Choosing between secured and unsecured loans depends on your business needs and how much risk you’re comfortable with. Go for an unsecured business loan when:

1. Asset Protection is Priority: If you don’t want to risk your home, shop, or business property, unsecured loans provide peace of mind. This is particularly important for entrepreneurs who have worked hard to build their assets.

2. Speed is Critical: When you need funds quickly no matter if you want to grab bulk purchase opportunities, pay a critical supplier, or manage your cash flow crises, the quick processing of unsecured business loans can be a great option. 

3. Small Ticket Requirements: When the working-capital requirement is small below 50 lakh rupees, such ease of loans available without collaterals usually offsets the extra interest burden. The effort and time saved after documentation and processing of the same can be used in the growth of the business.

4. Service-Based Business: Unsecured loans are perfect if you are running a consulting firm, IT or software company, or professional business services with limited physical assets. 

5. Seasonal Cash Flow: Businesses that earn more money in some months and less in others can benefit from unsecured loans. These loans, especially lines of credit, let them borrow money when needed and repay it later, making it easier to manage during slow seasons.

However, choose secured loans when you need large amounts (above ₹50 lakhs), have valuable assets to pledge, and can afford the longer processing time in exchange for lower interest rates.

How to Apply for an Unsecured Business Loan with BigMudra

If you are ready to get started, BigMudra offers a fast and seamless way to secure your unsecured business funding.

Simple Application Process:

1. Step 1: Fill in Basic Details
   
   • Business name, turnover, and type
     
   • Owner KYC – PAN and Aadhaar
     
2. Step 2: Upload Required Documents
   
   • Bank statements
     
   • GST certificate (if applicable)
     
   • Income tax returns
     
3. Step 3: Get Eligibility Confirmation
   
   • Receive personalized offers based on your profile
     
4. Step 4: Disbursal in 24–48 Hours
   
   • Choose a plan and get your loan directly in your bank account

Key Considerations Before Applying

Before applying for an unsecured business loan, consider these important factors:

1. Assess Your Actual Requirement: Evaluate Your Real Need: Let us take what we need. When you are granted a loan, it would be easy to borrow more, but this would attract interest on the full amount.

2. Compare Multiple Offers: Do not accept the initial offer that you get. Compare loan options with BigMudra, select the best deal between different lenders.

3. Read the Fine Print: Understand all the costs such as processing costs, prepayment penalties and late payment costs. These have the potential to greatly affect how much you pay in terms of lending.

4. Plan Your Repayment: You should also have a clear arrangement of repayment on the basis of business cash flow forecasting. Take into consideration seasonal changes and possible risks to business.

5. Maintain Good Credit Habits:  Establish a good credit history starting from scratch. Clear your prior loans and credit cards bills on time, and this will enable you to secure better terms when you apply to loan money next time.

Conclusion

In today’s economy, waiting months for a business loan or risking your property is no longer necessary. Unsecured business loans are making credit accessible to every deserving entrepreneur from bootstrapped startups in Bengaluru to family-run shops in Jaipur.

By understanding the types, benefits, and eligibility, you can make informed choices and secure the funds you need to grow your venture. Platforms like BigMudra are transforming the lending world by offering fast, collateral-free financing options suited for modern Indian businesses.

Whether you are starting a digital agency, scaling an e-commerce business, or simply need working capital to tide over a crunch, unsecured commercial loans are a smart, risk-free way forward.

FAQs

Q1. Can I get an unsecured loan without an ITR?

In cases that there is no ITR, a lender can request GST and bank statements, particularly with startups. Of course, with an ITR, you have better chances of approval.

Q2. What is the ideal CIBIL score for an unsecured commercial loan?

A score of 650 and above is generally preferred. Higher scores may help reduce interest rates and improve approval chances.

Q3. Is invoice financing considered unsecured?

Yes, invoice discounting or financing is a variant of unsecured loan in which the invoice serves as a receivable evidence whereas no asset security is guaranteed.

Q4. How fast can BigMudra disburse my unsecured loan?

BigMudra takes between 24 to 48 hours to process most loans and as such is one of the quickest lender in India to unsecured business loans.