How Easy Is It to Get an Unsecured Business Loan?

"Get an unsecured business loan online hassle-free. Apply now to secure the funding you need for your business without collateral with My Mudra."

Get Unsecured Business Loan

5 mins read

Published: 16 April 2024

Updated: 16 April 2024

Small enterprises either fail to meet the credit strictness criteria set by traditional banks or struggle with producing sufficient tangible assets for availing of secured loans. So, how can small businesses raise easy, timely, and secure capital for funding all their business requirements? "Unsecured Business Loans". The importance of unsecured loans for small businesses is significant, as they provide a platform to expand it very easily.

Undеrstanding Unsеcurеd Businеss Loans:

Unsecured business loans don't rеquirе any collatеral and likе your house, property, or car. This mеans you don't havе to takе thе risk of losing your pеrsonal assеts and if in casе your businеss can't rеpay thе loan on timе. Here's a look at what unsеcurеd businеss loans arе all about:

Unsecured Loan vs. Secured Loan:

Thе major diffеrеncе bеtwееn an unsеcurеd loan and a sеcurеd loan is that secured loans rеquirе collatеral and whilе unsеcurеd loans do not. If you can't repay thе loan amount during thе tеnurе pеriod thеn thе lеndеr can take the collateral. On the other hand with an unsеcurеd loan, there's no collatеral for the lender to take from the borrower.

Advantagеs of Unsеcurеd Businеss Loans:

  • Thеrе is no risk to personal assеts and since thеrе is no collatеral/sеcurity required and your assets arе vеry safe if you can't repay thе loan amount on timе.
  • Fastеr approval processes mаkе thе unsecured loans idеal for businеssеs that nееd monеy quickly.
  • Thеrе is flеxibility in unsеcurеd businеss loans as you can usе thе loan for various businеss purposеs such as еxpanding your business morе and buying the inventories and or covering your unexpected еxpеnsеs.

Factors Affecting the Ease of Obtaining an Unsecured Business Loan

  • Credit score
  • Business plan and financial projections
  • Time in business and revenue history
  • Industry and market trends

Tips for Making It Easier

  • Improving credit score.
  • Developing a strong business plan.
  • Building a relationship with lenders.
  • Exploring alternative lending options.

Also read: Why Personal Loans are Better than Secured Loans?

Why do Small Businesses Prefer Unsecured Loans?

There are multiple reasons for small-scale enterprises and industries to get unsecured business loans in India, which are mentioned below:

1. No Collateral Needed

An unsecured loan denotes loans without any requirement for a security pledge. This feature is helpful for those small enterprises that are just starting their business or those that do not operate on asset-heavy models.

2. Flexible Tenure

The lenders prefer extending unsecured business loans for a short duration and the terms are generally flexible. The repayment period can vary from lender to lender between 12 months to 84 months. Additionally, a borrower also has the choice to pre-pay their loan amount or to make part-payments of the total loan amount. Thus, an unsecured MSME (Micro, Small & Medium Enterprises ) loan is highly suitable for those who are looking to capitalize on a near-term growth opportunity.

3. Improves Credit Scores

Borrowers can improve their credit score by paying their loan installments on time, MSMEs can also build their credit history and raise their CIBIL scores swiftly. This is easier with unsecured business loans as they are generally for short-term periods, and help quickly add up to an MSME’s solid thick credit file or credit report. As a result, they can avail of business loans at competitive interest rates in the future. A credit score is the best way to avail an unsecured business loan in India.

4. Ownership Retention

Many borrowers don't choose bootstrapping and secured loans as an option, many startups and new businesses end up raising funds from angel investors and venture capitalists (VCs). However, any capital raising comes at the cost of stake dilution and an equity stake sale which is not a clever decision. Thus, unsecured business loans are the best alternative for those who are looking to retain full ownership of their business and its profits completely by themselves.

5. Quick and Easy Application

Unlike secured loans, which require stringent security checks (collateral) and procedural requirements, unsecured loans are much easier to get. To avail of unsecured business loans online fewer documents are required that are easily verified digitally without any hassle. As a result, small business owners who are expanding their business or starting a new venture are extending loans within a short period—something of high consequence for those borrowers who are looking for funding during a financial crisis and need the loan urgently.

6. Working Capital Needs

Since MSMEs struggle a lot to maintain adequate working capital for their business, an unsecured business loan can go a long way in sorting out asset mismatches with different financial institutions. Owing to their quick disbursal, minimal paperwork, and short tenures, small business owners can suitably rely on an unsecured business loan to fend off or defend themselves against any cash flow inconsistency while carrying out their daily operations efficiently and swiftly.

7. No End-Use Restriction

In contrast to secured loans that are usually tied to a specific business purpose or are dominantly limited in their end-usage, unsecured business loans come with no such restrictions. From buying any new machinery, rationalizing cash flows, and paying back debt, to meeting any emergencies, or any other thing an unsecured loan can be used for any or all of these purposes without any restrictions.


Thus, an unsecured loan can help small businesses in their growth and in expanding the business, even without going down and giving any security pledge to the lender. However, before applying for unsecured business loans online do compare different lenders and their loan offerings on their end-use, competitive interest rates, annual percentage rates, repayment schedules, tenure, and other charges, before making the final decision.

Scale your business to new heights with an unsecured business loan from My Mudra. We offer unsecured business loans for funding all your business needs, including operational expansion, purchasing new equipment, new staff hiring, budgeting for marketing, and much more.

My Mudra offers unsecured business loans at affordable and competitive interest rates.

Apply now for an unsecured business loan online by visiting My Mudra's official website or give us a call at 85888-06836 to know more!

Also read: How can an Instant Business Loan Benefit your Business?

android apple