Trying to run a business without proper financial backup can cause individuals to shift their focus from profitability to ensure the company stays afloat. The focus should be on expanding an existing business, buying new equipment, boosting production, and more.
In this regard, in the last six months, several businesses have faced severe setbacks due to a drop in sales. Therefore, with a general economic decline and increasing financial challenges, businesses require a funding source that will ensure financial resources without any collateral.
With unsecured business loans, MSMEs can access the funding they require to keep their company operational. However, these business loans come with some eligibility criteria that applicants must comply with. Before an individual approaches an unsecured business loan lender for funding, he/she must pass the eligibility criteria for the same.
What are the eligibility criteria for an unsecured business loan?
To ensure that your business is eligible for an unsecured business loan, it needs to comply with the following criteria –
- Years of operation
When submitting a loan application, ensure that your business has been in the market for three years or above. This assists unsecured business loan lenders to approve your application faster than the others.
- Financial history
Businesses should provide financial institutions or NBFCs with a proper financial breakdown. This will help the institution to understand the requirement for a loan. This increases the chances of approval as well.
- Credit score
When applying for an unsecured business loan, ensure that your CIBIL score stays above 700. A score lower than this can cause the loan application to be rejected by unsecured business loan lenders.
- Business plan
Provide financial institutions and NBFCs with proof of feasibility by structuring a proper business plan. This plan must list the purpose to avail of the loan and the time required for repayment. It helps lenders understand whether the business is worth investing in.
- Annual turnover
Provide a proper statement of the annual turnover of your company. It helps financial institutions understand if you are capable of repayment and if your business is profitable.
Apart from these, applicants have to be between 25 and 65 years of age to be deemed eligible for the credits.
Documents necessary to apply for an unsecured business loan
When applying for credits, applicants will need to submit a few documents for a business loan. These documents will help your unsecured business loan lender understand if you are eligible to avail of the funds –
- Fill out the entire loan application document
- Provide your proof of registration or license of the business
- Audited annual financial statement of the business
- Self-attested KYC documents as specified by the guarantor or lender
- List of company directors or shareholders
- The bank account statement of the last six months
- A properly signed list of working capital facilities and existing term loans.
Fulfilling the eligibility requirements and submitting these documents can help avail of the best unsecured business loan interest rates.
Tips to help improve business eligibility for an unsecured business loan
- Don’t submit an unaudited financial statement. Get your company’s financial statement prepared quickly before you send it for submission.
- You must prepare the documents, including GST returns, registration paper, list of directors, loans, etc.
- Prepare a detailed map of future cash flow and a proper business plan.
Therefore, if you plan to opt for an unsecured business loan, you will need to ascertain that you fit the eligibility criteria. It will guarantee you instant approval.
Financial institutions like Bajaj Finserv provide high loan amounts as unsecured business loans. The amount is available on passing the eligibility criteria and providing the required documents.
The NBFC also provides pre-approved offers to customers to simplify the loan application process. These offers are available on personal loans, credit cards, etc. Check your pre-approved offer by providing your name and contact details.
Therefore, check if you fit the pre-set eligibility criteria of any financial institution or NBFC before submitting your application to ascertain approval. If you plan to avail of an unsecured business loan, choose a financial lender setting lenient eligibility requirements to enjoy hassle-free disbursal. You need to provide the required documents to enjoy swift and easy business loan disbursal.