Categories and Respective Interest Rates of Unsecured Business Loans in India

According to official reports, India has retained its rank as the 3rd biggest platform for start-ups in the world with numerous such organisations being set up every year. With a workforce that is expected to touch 160 to 170 million by 2020, business ventures are aiding in GDP growth as well as serving innumerable households by creating a secure source of income.

Business loans offered in India

Crucially, this boom in the business sector with upcoming ventures has been promoted by numerous Government initiatives. Furthermore, financial institutions have also come up with multiple loan offers which aid entrepreneurs with financial assistance.
Understanding these loans for businesses, it is important to understand that the most convenient line of credit is that of unsecured business loans. These are not granted against any collateral and as a result, concerned business enterprises are not mortgaged and therefore free from the financial institution.
Essentially these unsecured loans are granted much faster since the documents required for a business loan are very minimal. Furthermore, there are many types of business loans which cater to different types of financial needs.
For budding entrepreneurs, it is important to understand all categories of advances which are offered by different NBFCs in order to choose the right financial product for themselves.

Categories of business loan offers

There are multiple categories of collateral-free business loans which are offered by financial institutions. Some of the most beneficial and well-designed offers amongst these different categories of loans are discussed underneath. The rates of interest offered along with additional features are mentioned too.
       Business loans for SME and MSME: These loans generally offer a sum of money going up to Rs. 30 Lakh. While considering what are the benefits of MSME loans, business owners should note that all infrastructural and running costs can be covered by this. These loan schemes are approved within 24 hours of application. The interest rates applicable to these loan products begin at 18% per annum. Any individual between 25 and 55 years of age with a business operation that is running for at least 3 years can avail this financial product.
       Business loan for professionals: There are numerous unsecured business loans which are offered to professionals like doctors, chartered accountants, etc. In the case of doctors, generally, an interest rate ranging between 14% and 16% is applicable. In the case of chartered accountants, this rate of interest comes down to a range of 14% to 15%.
       Working capital loan: This line of credit is offered to business ventures to fund the running of their day to day operations. This type of unsecured business loans is used to finance acquiring raw materials, inventory purchase, overhead cost payments, etc. This loan can be availed by business owners to pay their suppliers in advance or even to maintain a healthy level of finance. The interest rates on these loans begin at 18% per annum.
Entrepreneurs and professionals who have decided to set up their own shop with an unsecured business loan can easily apply for the same online. Financial institutions like Bajaj Finserv even bring you pre-approved offers that make availing business loans quick and easy.
With all the different categories of loan offers explained, professionals and businessmen alike can choose their correct fit. With the ease in documents required for a business loan in India, these loan offers from different NBFCs should be compared before application.

Additionally, the Government of India also provides numerous tax benefits under the Income Tax Act. Learning about tax-saving tips for small business owners ensure that they save a lot of their finances in the long run.

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