Category: Unsecured Business Loan

In 2020, COVID had a significant impact on the market and businesses all over the world. However, after the situation started to get under control a little, things started getting better. The creation of a vaccine gave much hope to business owners, especially small and medium-sized ones. This was the picture everywhere in the world, but it changed drastically almost overnight in India. When the rest of the world started recuperating from the pandemic, India dealt with the second wave of the disease. In such a situation, thinking about an unsecured business loan in Kolkata was beyond possibility for most people.

A little Peek into the COVID Situation and its Impact

With all the restrictions and other safety requirements, handling direct business while interacting with the customers had become tough in 2020. It seems that 2021 is making things more difficult, especially in some areas of the country. Yes, the introduction of the vaccine is bringing back lost hope in people, as they understand that beating COVID is possible. This development is helping business owners to hope for a better future. If you have a business and it is not a huge conglomerate, then along with making enough sales and profit, you will have to think about ensuring the flow of cash.

The Problems Faced by Businesses in the Post-pandemic World

In the post-pandemic world, every business owner, notwithstanding the size of their organization, is facing the following issues:

Lack of demand for products and services alike is causing many problems in businesses. People do not have enough money to indulge in luxuries. Hence, companies are suffering a lot.

Due to COVID and the way life got stalled all over the world, corporate optimism, it seems, is at an all-time low, and that is creating low expectations in everyone. Therefore, fulfilling those expectations will be easier, but that does not mean the present scenario is hope-inducing.

Households do not have access to as many funds as before to spend on various areas. People, instead of depending on a regular income, are dipping into their savings. Though it is managing the situation now, prolonged lockdown will be hurting people a lot.

Consumer sentiment is getting weaker as people are finding it futile to spend on products and services when there is no guarantee of people and their lives.

Various restrictions are harming businesses and their growth. It is also resulting in the loss of job opportunities for people. In short, new options are not available, and the present and older ones are dwindling. This is not a favorable time for businesses.

The price of raw materials is growing, and there is a crunch of cash which is affecting businesses more than ever.

Ensuring Better Cash Flow for the Businesses

Cash flow is something essential for every business. Without easy access to a considerable amount of cash whenever required, a company cannot function properly. Hence, unsecured loans are crucial. They provide the necessary amount of money while ensuring the business can cope with its issues. Unfortunately, the second wave of COVID had been more terrible than the first wave. However, somehow people and businesses are now one year older and more experienced. So, they are better equipped to handle the situation, but additional assistance will always be required.

As the owner of a business, arranging for the proper flow of cash is essential because it can save your business at crucial moments. The best way of organizing for the money is through loans, and it can be either secured and unsecured. Usually, small business owners tend to opt for secured loans because they seem to be the best choices in this context. If you are looking forward to such a loan, yet want to explore other options, then an unsecured business loan in Kolkata will be an interesting selection. The concept of such a loan is simple. You can apply for such a loan without needing any collateral.

The Availability of Unsecured Loans for Your Business 

Usually, unsecured loans are made available by non-traditional lending institutions, but that does not reduce the importance of such financial help. While keeping everything in mind while applying for an unsecured business loan, it is necessary to understand the concept first. Once you are clear on what is happening and how it is supposed to happen, asking the rest of the questions will become easier than ever before. Owning a small business comes with several additional responsibilities that you are yet to comprehend fully. Hence, preparing for the process will be a wise decision.

Getting Information on Some of the More Critical Aspects 

The first question you have to ask regarding an unsecured business loan is the matter of collateral. Yes, unlike the regular traditional version of a loan, an unsecured one won’t require you to arrange for collateral. This is one of the reasons for more people choosing this option over the secure version. If you are thinking in the same way, it is necessary to understand the pitfalls of this convenience. It is true that, for an unsecured loan, you won’t have to arrange for collateral, and that should solve several of your issues; at the same time, it will add a few to the existing ones. The loan amount will be comparatively lower, the interest rate will be higher, qualifying for one will be more complicated, and many other issues will arise.

The Crucial Questions You Should Contemplate 

If you are on the verge of applying for an unsecured loan, then asking yourself the following questions before making the decision will be a wise choice. They are:

• How urgent is the need for money?
• Can it be handled a little longer, and can you wait for a regular loan process to complete?
• Do you have no access to any collateral?
• Is your business capable of qualifying for an unsecured loan?
• Is the lending institution trustworthy?
• Is the amount of money you will receive through the unsecured loan enough?
• Are you ready to pay the higher interest rate to avail the loan?

Unless the answer to all these questions is satisfactory enough, you should not decide on a whim and carefully weigh each solution.

It is All About Helping Your Business 

The questions mentioned above are some of the most relevant questions you should be asking and finding an answer to before deciding. Knowing the answers will help with making the right decision without causing any harm to the business. Securing the fund is necessary for your business, but that shouldn’t cause the organization to stop functioning. Hence, you should compile a list of questions and find the answers to them.

A business may require a loan at any point in time because ensuring smooth cash flow is necessary for a business’s growth and continued existence. For small and medium-sized businesses, providing that kind of cash flow all the time is not possible. Hence, they tend to opt for loans to assist in their business process and cover their financial requirements. As a business owner, when you are planning to apply for a loan, you will have two options. One is an unsecured business loan in Kolkata, and the other one is a secured loan. If you are not familiar with either concept, it is necessary to gather relevant information on the topic.

The Primary Difference Between the Two Kinds of Loans

The fundamental difference between a secured and unsecured loan is that, in the first option, you will have to arrange for some collateral against which you will receive the loan. For the latter option, though, you do not need collateral. Not every business has enough property to offer as collateral because the amount of your loan will depend on the value of the collateral. It is also the security for the lender if you are unable to repay the loan. If your business or you do not have a piece of property with enough value to secure the loan, it will be better to apply for an unsecured loan.

The Pros of Applying for an Unsecured Business Loan

Before applying for the same, though, it will be better to gather enough information on the topic, including the pros and cons of an unsecured loan. The pros of applying for an unsecured loan are:

• The traditional business loan application process is intensive and lengthy. There are thousands of formalities you need to fulfill. Unless every criterion is getting addressed and satisfactorily managed, it won’t be possible to apply for one. In comparison to that, the unsecured business loan won’t take much time because there isn’t a lengthy vetting process to check every aspect of the loan.
• The best part of an unsecured loan is that it does not require any collateral in part of the applying business. So, if your company does not own much property, you do not have to worry about securing the loan and dealing with the financial issues you are facing at the moment.

The Cons of Applying for an Unsecured Business Loan

The cons of the unsecured business loan are as follows:

• The interest rate is going to be considerably higher than the traditional secured loan. As these loans are riskier for lenders, they would try to compensate for that part of the issue through the rate of interest.
• Not having or needing collateral is a blessing for the loan purpose. However, the same criterion makes the lenders look closely into the credit score financial history of the business. Qualifying for an unsecured loan will be harder, and the amount of money you will get in the process will be lower than a secured loan.

The Decision Will be Yours and an Informed One

In short, whether to apply for the secured loan or the unsecured loan is a decision you will have to make, and it should depend on careful consideration of all the details. Hence, knowing about both the pros and the cons associated with an unsecured business loan is essential.

Generally, it is tough for small and medium-scale businesses to collect funds for expansion and development. A small business owner with no assets or collateral has zero chances of getting a loan from traditional lending institutions. Many businesses had failed as they could not secure the funds required to grow their business at the ideal time. On the other hand, those who borrowed from informal lenders had to bear high interests that eat up a significant amount of their profits.

Everything You Wanted to Know About the Unsecured Business Loan in Kolkata

Proper working capital is essential for businesses to run everyday operations smoothly. On the other hand, irregular customer payment schedules, outstanding bills, and other operational expenses make it challenging for small businesses to ensure continuous cash flow.

In such scenarios, continuous cash flow can be best maintained by unsecured business loans, which suffice as a cash buffer that helps meeting everyday expenses, such as paying salaries stocking inventory, paying rents, other expenditures with ease. Hence, with an unsecured business loan, it allows concentrating on long-term growth besides being pressurized by short-term fund needs.

Supports the Growth and Development of a Company

People are choosing unsecured business loan in Kolkata as it helps in meeting everyday expenses without any hindrance. Also, unsecured loans play an essential role in the growth and development of a company. When the business owner is thinking of expanding their processes, whether it is launching new products or buying new equipment, it is impossible without funds. With unsecured business loans, a proprietor can make the best use of the different opportunities that presents themselves with time.

Flexibility for Funds Usage

The big drawback of traditional banks is they do not allow using the traditional banks according to the user’s preferences. Many banks need to submit detailed business expansion proposal plans to get the money. On the other hand, there is no bar associated with funds usage in the case of unsecured business loans. Furthermore, the digital lender hardly asks regarding the reason for which the funds are being taken. So you can use the funds to hire extra employees, expand business processes for R&D purposes, or any other reason- it is entirely up to the user’s choice.

An unsecured business loan is also famous for improving the business reputation of the company. Many companies that offer such loans understand the problems which start-up company owners face at the beginning of the business. Hence, unsecured business loans are designed in a such a way so that it meets the monetary requirements of small businesses.

Moreover, unsecured business loans can be received even with a poor credit score, which is impossible in traditional bank loans. Furthermore, the added advantages are fast processing, high eligibility, flexibility, and many other benefitting aspects that help small business owners greatly.