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How to Get a Collateral-Free Loan in India?

The rise of small-scale business enterprises has pushed the Finance Ministry of India to decide on a collateral-free loan scheme to provide an excellent financial resource for these businesses.

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The rise of small-scale business enterprises has pushed the Finance Ministry of India to decide on a collateral-free loan scheme to provide an excellent financial resource for these businesses. As a result, such eligible enterprises’ business owners can avail loans from banks, fintech companies, or NBFCs.

1. Banks:

The Banks serve as a leading authority for secure as well as non-secure loan sanctioning. Several banks are belonging to both public and private sectors that are authorized for collateral-free loan disbursement.

The banks in India that can be sought for availing a collateral-free loan by business owners include the leading names such as Axis, Bank of Baroda, State Bank of India, Fullerton India, State Bank of Hyderabad, UCO Bank, HDFC, Kotak Mahindra Bank, and ICICI bank, etc.

As per 2014, the list of financial institutions sanctioning collateral-free loans in India has reached the number of around 133 banks that comprise the Private, Public, and Foreign banks. The business owner may also contact the MSME helpline to gather further knowledge regarding the affiliated institutions related to collateral-free loans.

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2. NBFCs:

Another authority related to collateral-free loans is the Non-Banking Financial Corporations in India. If an individual business owner finds it difficult to allocate the banks to avail of a collateral-free loan, then he/she can turn to an NBFC for financial assistance.

The top NBFCs operating in India that provide a collateral-free loan are Muthoot Finance, Bajaj FinServ, Mudra, Indifi finance, or Lending kart finance.

3. Fintech Companies:

Such financial institutions also provide a collateral-free loan to the small-scale business owners. Examples of such companies include MoneyTap, Capital Float, Mobikwik, Lendingkart, Neogrowth, InstaKash, Shubh loans, etc.

A business owner can go for such financial technology companies to seek advice or claim a collateral-free loan. Such financial institutions are garnering the attention of many due to their ease of use and online facilities.

Feature Banks NBFCs Fintech company
Rate of interest 11%-19% 11.5%-20% 16%-22%
Additional Charges 0.75%-1.5% Nil 1%-2%
Loan period 5 years 5 years 3 years
Loan application approval time 30-35 days 20-25 days 3 days

4. How can one avail of a collateral-free loan in India?

If a business owner is interested in applying for a collateral-free loan, then they are in luck because the procedure of applying for these loans is as easy as it gets.

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  • First, the business owner should decide the lending institution that they wish to seek the fund from. The available options include NBFCs, Fintech companies, or Banks.
  • Next, the business owner must go through all the eligibility criteria set by the lending institutions for the loan allotment process.
  • If the candidate fulfills the eligibility criterion, then they can go to the lending authority to request the application form for a collateral-free loan. In case the lending institution is a bank or fintech company, the candidate can go for an online application after registering at the official website.
  • Next, the business owner must complete the loan application form by submitting the credentials relating to the policy or the candidate that is asked to be filled.
  • After completing the application form, the candidate can attach the required policy documents and pay the administrative fee (if any).
  • This is followed by a loan application approval process that may take 4-5 days.

5. Documents required

The documents that are needed to complete the application form for a collateral-free loan include:

  • Candidate’s age-proof: The documents like Aadhaar card, Voter ID, or driving license are considered valid for this purpose.
  • Candidate’s residential proof requires either the bills of amenities like electricity or PAN card or Voter ID.
  • The complete set of KYC documents
  • Proof of business corporation
  • Candidate’s ITR of the previous financial year.

6. Pre-requisites for eligibility to claim a non-collateral loan:

A business owner who wishes to procure a collateral-free loan is advised to go through any policy’s eligibility guidelines before deciding to apply. This is because a failure to fulfill these eligibility criteria may lead to the loan application’s disqualification.

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  • The candidates considering applying should be within the age bracket of 21 years to 65 years.
  • The disbursement of a non-collateral loan is dependent on the applicant’s business portfolio. Thus, the performance of the business shall be the deciding factor for loan approval.
  • Most of the lending institutions mandate that the applicant’s business for which the loan is requested has to be functioning for at least three years for an application to be approved.
  • The business owner’s credit history also influences a collateral-free loan. The application process involves a detailed account and inspection of the applicant’s credit score. Whether one is applying for the loan in the name of the business or their name, a healthy credit score will help get the loan application approved.

A collateral-free loan is a beneficial tool for small business owners. It helps boost the business’s function and give financial support to the business owner that helps keep the business up and running. These loans are convenient to avail of and provide short-term financial aid to the business owner.

Any SME can utilize the benefits and merits of a collateral-free business loan. Not only that, but these loans can also be availed for use for other purposes such as education.

7. Collateral free loans other than MSME loans:

Although the non-collateral loans are majorly business-oriented, there are other types of non-collateral loans that fulfill some purposes other than the business investments, and these include:

  • Personal loan
  • Credit card loan
  • Education loans
  • Instant loans

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Business

What is a Customer Data Platform?

Consolidating real-time data sources, linking them to a customer profile, and making them instantly deployable in a campaign gives a CDP a great chance of winning over your present marketing team members.

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What is a customer data platform

A customer Data Platform (CDP) is a new approach to centralizing your business’s promotional and sales information. Learn how companies use CDP to get ahead of the competition and effectively address their clients.

1. Understanding a Customer Data Platform

A customer data platform stores and organizes customer information in one place, making it accessible to various customer care, sales, and marketing departments. The software can do its functions because it compiles information from multiple channels, such as your company’s social media profiles, website statistics, and live chat sessions.

You may best analyze your consumer’s needs and produce more targeted marketing campaigns with a customer data platform. Your marketing and sales activities will be more efficient, saving you time and resources. The advertising, sales and other teams that you manage will be able to make more informed decisions with the help of detailed prospective customers.

2. Reasons Why Businesses Should Implement a Customer Data Platform

A customer data platform is essential for modern businesses for many reasons.

The Elimination of Third-Party Cookies

Given the development of privacy rules and the shifting security expectations of consumers, marketing methods dependent on cookies set by third parties are becoming more unsustainable.

First-party consumer data, collected directly from your clientele, is the new gold standard. You may better serve your clients’ individual needs by creating a unified database of their information and using that information to send them tailored messages. By adjusting to the world of first-party cookies, your digital advertising will be able to draw on a far richer pool of data, including consumer interactions, choices, and transactions.

Development of Comprehensive Channels of Interaction

Advertising platforms like Google Ads and social media are becoming more popular among businesses. Direct mail campaigns are one kind of marketing communication, sales call to prospective clients, and in-person visits from clients. Whatever channel your consumers choose to engage with your company, it’s essential to provide them with a smooth, customized experience.

Omni-channel success begins with a detailed consumer profile fed by a customer data platform. If you do not have the proper marketing software, your clients may have a poor experience with you on several platforms. That is an issue since clients who are unclear on what they want cannot make a purchase.

Adopting a More Personalized Approach to Advertising is The Norm Now

Marketing Messages that are universally sent to all customers, both present and prospective, are no longer appropriate. Consider the impact of brand loyalty on advertising, for instance. One customer’s connection with your business is not the same as another’s, even if they have made many purchases from you.

With marketing technology, particularly a customer data platform, it is now feasible to personalize marketing communications in response to individual customers’ actions. The most excellent way to learn what a consumer wants is to tailor your marketing to their purchases, purchasing habits, and associated activities.

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3. Benefits of Customer Data Platform

Track the Most Productive Advertising Avenues

Knowing who you are selling to enables you to focus on the most effective methods of communication. Their use patterns may help you determine the best places to advertise to them, increasing your chances of success.

Make Better Products and Services Available

Understanding your clientele has applications beyond advertising and sales. Customers’ pain concerns are a goldmine of information for developing fresh offerings that appeal to your target market.

Upgrades Your Advertising Language

With a deeper understanding of your target demographic, you can craft more persuasive marketing communications. Knowing your potential market’s language, pain points desired solutions, and previous purchases allow you to communicate with them more effectively.

Accumulate All of Your Client Information in One Centralized Database

There are many different places where data on your customers may be found. A customer data platform consolidates data from several sources into a centralized repository, giving you a complete view of your clientele in one convenient location. There is no need to go between applications to compile data on your clientele.

4. Final Verdict

Consolidating real-time data sources, linking them to a customer profile, and making them instantly deployable in a campaign gives a CDP a great chance of winning over your present marketing team members. As the pace of your campaigns increases on a global scale, you may find yourself in the advantageous situation of improving the degree of customization and targeted advertising. This aligns with a decline in time spent on data cleansing and making ads.

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