Having an excellent idea for your startup is not enough. One of the major challenges that startup entrepreneurs tend to face is the lack of proper capital or funding to convert their innovative idea into reality.
In this case, taking a startup business loan turns out to be a viable option. Startup business owners can consider taking up a startup business loan without collateral to achieve the desired funding.
Most startup organizations do not have access to assets like shares or property to offer in the form of collateral for taking up a business loan. However, this does not imply that they cannot apply for a business loan. It is made possible through options of startup business loans without collateral.
Tips for Applying for Startup Business Loans Without Collateral
If you wish to improve your chances of getting a startup business loan without collateral, here are some tips for you:
Improve the Credit Score
If you wish to get approval for your startup business loan effortlessly, you are expected to provide a good or average credit score.
A score above the mark of 750 is regarded as decent while significantly improving your chances of getting approval for the desired business loan.
In addition to this, good credit scores also help you to effectively negotiate reduced interest rates. You can achieve the same by using credit cards to pay the respective utility bills, settling all possible dues in full amounts before the stipulated due dates, preventing taking multiple credits at a time, and avoiding closing unused credit cards.
Get Away with All Pending Debts
When you might be repaying multiple loans consecutively, there are higher chances that your request for a new loan might be rejected.
For instance, if you are already paying for a home loan and a car loan, lenders will not be highly inclined to service a loan for your business. It is because they will not be confident in your capability of paying back the loan amount on time.
Come Up with a Robust Business Plan
With your dedicated business plan, you are expected to create a strong case if you wish to access a startup business loan without collateral. It is recommended that you come up with a comprehensive plan that helps in describing your core idea, process, market opportunities, financial projections, and so more.
When you provide access to a comprehensive business plan outlining all relevant information, it helps in developing a sense of confidence amongst potential lenders. They understand that you have done your research well. It leads to the creation of a positive impression to nod positively for your business loan.
Analyze All Requirements Thoroughly
While applying for a startup business loan, it is recommended to ask for the amount that you need exactly. You might want to get your hands on abundant capital towards achieving your ambitious plans. It is important to think about how you are going to repay the big amount.
You are recommended to estimate effectively while applying for a business loan that you are capable of servicing. When you ask for a significant amount without justifying its need, you have a higher chance of getting your application rejected.
Consider Taking the Unsecured Business Loan
Taking up an unsecured business loan for your startup serves to be an easy way to finance your business. It is because they are easy to obtain while requiring no collateral.
As the startup is expected to face a lot of challenges, you should access hassle-free, reliable unsecured business loans to take your business forward.
How can You Apply for a Startup Business Loan Without Collateral?
The eligibility criteria for obtaining a startup business loan might differ from one lender to another. Some of the important steps needed to determine your eligibility for a startup business loan without collateral are:
- Profitable business with an average CIBIL score of 700 or more
- The minimum age requirement for the loan is 18 years. The maximum age limit is 65 years.
- The candidate applying for the loan must be a citizen of India without any criminal history
- Business for at least 6 months
For most startup businesses, taking up a business loan can be challenging. With the help of revenue-based financing, you can think of infusing new capital into your business.
Most startup owners who might not prefer the concept of taking up a startup business loan can consider the lucrative option of revenue-based financing. Get in touch with the most reliable finance partner Velocity to get the best financing solutions for your startup business.
