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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.

Published

12 months ago

October 19, 2020

TwinzTech

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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.

Table of Contents

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.

Business Loan

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

Business

How To Maximize Cloud Computing For Your Business

If you’re a business owner and have been using cloud computing, this article will discuss several methods that will help you maximize cloud computing for your business:

Published

1 day ago

October 17, 2021

TwinzTech

How To Maximize Cloud Computing For Your Business

As time passes by, technology advances to advance. With everything going digital now, the traditional use of portable hard drives is slowly disappearing. The best example is how businesses continue to take advantage of cloud-based services for convenience and mainly to increase their productivity. If you’re not familiar with cloud computing, it pertains to the delivery of services that stores and access data via the internet. It commonly includes servers, cloud storage services, online databases, and many others.

Most companies turn to cloud computing for security, data synchronization, and convenience. Flexibility and collaboration are also common factors. One advantage of using cloud computing services is that it reduces operating costs. Though it’s not often mentioned, sustainability is another reason why companies switch to cloud computing. Moving to the cloud lessens the usage of physical data centers, thus saving energy and reducing the impact on the environment.

There are many ways of improving your business with cloud computing. However, there are still companies that are yet to discover the full capabilities of cloud computing. If you’re a business owner and have been using cloud computing, this article will discuss several methods that will help you maximize cloud computing for your business:

Table of Contents

1. Improve Security

Your chosen cloud provider comes with a security system. Because of this, your files are most likely safer in the cloud. However, essential cloud services only offer basic security, so you still have to be careful. Security breaches can badly affect your business. Hackers make these attacks, but sometimes they could also be caused by an employee.

How To Maximize Cloud Computing For Your Business

One way of improving cloud security is to employ features that help monitor end-user activities. By spotting suspicious usage patterns and activities, you could prevent a security breach. Training your employees and equipping them with security tools is the best way to prevent such attacks. This could be further enhanced by setting up additional security protocols and educating them on cybersecurity. Another way is to restrict access to important files. You can do this by setting passwords on such files.

2. Utilize File Syncing and Organization

The right cloud infrastructure solution for your business will provide your team access to the newest files anywhere. Instant file synchronization is another benefit of using the cloud. The cloud is a virtual location where you and your team can conveniently share files. This is very useful for businesses that allow employees to work remotely. With a stable internet connection, your staff can work from anywhere in the world and access files on any device, allowing flexibility.

Also, cloud data storage has a similar structure to a filing cabinet, where files are stored in folders within the storage (filing cabinet). It’s essential to construct a storage layout and establish a standard labeling system if you’re sharing access with your team. Organize your files from the beginning and as you go. This will make it easy to find and identify files whenever they’re needed.

3. Back-Up Data

Backing up data is another crucial security consideration in businesses. Similar to file syncing, you can update your backup data as you work with the cloud. The cloud can duplicate the data you input into another site (off-site) where they’re secure from threats. This will also enable you to access the backup data when an error occurs conveniently. More importantly, it guarantees business continuity and reliable data recovery.

4. Optimize Communication

Use cloud computing services that offer more features that optimize communication, like calendars and emails. This will help you arrange meetings more efficiently. You can even facilitate more extensive collaborations and set synchronized deadlines for projects.

Cloud computing data center. Storage cloud on computer data center background. 3d illustration

5. Monitor Data Analytics

Look for cloud providers that offer big data analytics. This will enable your cloud service to collect data about your business’ buyers, trends, performance, etc. Then, these data can be calculated to identify growth opportunities. Other data analytic services collect information that may help create solutions to your business’s workflow problems.

6. Stay Up-To-Date

System updates are a must in cloud services to patch up bugs, address technical issues, and adapt to the changing consumer needs. So, when there are system updates, make sure to implement them once you’ve verified compatibility where applicable.

7. Use Social Media

Social media is possibly the most successful platform in digital marketing. However, it is often overlooked as an application of cloud computing. Social networking sites will help you find your customers and easily share data with them through page posts.

Final Thoughts

Although there are numerous ways to maximize cloud computing for businesses, these are the most helpful. With the increased use of cloud computing, companies can quickly improve and boost their productivity and efficiency when these services are maximized to their full potential.