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Securing a Business Loan Without Collateral

Business Loan without collateral or security is understood by the business owner or successful entrepreneur shall not have to submit any kind of collateral or security with the Bank/NBFC before availing of any loan. Unsecured business loans offered by financial institutions are popularly called collateral-free loans and the maximum loan amount can be up to Rs. 2 crore. Nevertheless, if it is a secured business loan then the collateral to be capitulated are in various forms, like residential as well as commercial properties, types of equipment, pieces of machinery,  raw materials, goods, inventory, fixed deposit, gold, vehicles, etc.

Collateral, whether to be submitted or not is the biggest concern of any start-up entrepreneur. For business owners, there are multiple things at stake such as their residential or commercial land, savings, owned pieces of machinery, various kinds of raw materials, and much more. Therefore, a collateral-free loan is preferred by the entrepreneur to operate and manage the business easily without stressing about the assets at stake. Business Loan Without Collateral can help many small-scale business setups. The government of India has taken several initiatives to provide credit facilities and promote these small-scale industries and startups. For that reason, different loan schemes for startups have been introduced, wherein there is not much need to submit any collateral or security. While looking for a business loan in Delhi, ensure to consider the following mentioned schemes:

1. MUDRA Loan under PMMY

“Fund the Unfunded” is the main motto of the MUDRA loan. Providing adequate funds to the micro units and the non-corporate small businesses is the main purpose of the Micro Units Development and Refinance Agency (MUDRA). The bank facilitates loans under the MUDRA scheme per the customer’s requirements.  Based on this scheme, collateral-free loans are offered in these kind of loans.

Three categories of loans are availed for people under the MUDRA scheme which are classified as:

SHISHU, KISHOR, TARUN 

  • The  Shishu Loan: The government offers loans up to Rs. 50,000 in this loan scheme. The Shishu scheme is specifically for start-up businesses.
  • Moreover, the Kishor and Tarun schemes are strategically designed based on business and the funding needs of the beneficiary. For schemes such as the Kishor scheme, loans are provided from the range of Rs. 50,000 to Rs. 5 lakh and can go up to Rs. 10 lakh of loan amount under the other scheme called as Tarun scheme.

2. Stand-Up India Scheme

 Government scheme such as the Stand-Up India Scheme aims to financially empower scheduled castes and scheduled tribes along with women entrepreneurs of the nation. Based on this scheme, the banks regulate the loans between Rs. 10 lakh – Rs. 1 crore, for least one woman, SC/ST borrower for setting up an enterprise either in the manufacturing service, or other sectors such as trading.  The tenure of the loan is up to 7 years.  Such a scheme promote promising women entrepreneurs among scheduled castes for their upliftment and scheduled tribes for the same.

3. Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

A credit guarantee fund scheme for micro and small enterprises is launched by the government of India to promote and lead these startups to their success. Under this scheme, new and existing enterprises both are covered. The amount of loan offered to any individual depends on the eligibility and viability of their business. Based on this scheme, the maximum limit of the loan is Rs. 1 crore per borrowing unit without any collateral. In addition, this scheme offers collateral-free loans.  Under the category of the National Bank for Agriculture and Rural Development (NABARD), the banks eligible to avail scheme are all scheduled commercial banks, public and private sector banks, foreign banks, and some of the selected Regional Rural Banks. 

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