In India, access to credit can be a game-changer for entrepreneurs and small businesses. However, many face a major hurdle — lack of collateral. Fortunately, with the rise of digital lending and government initiatives, getting a business loan without collateral is now more accessible than ever.
In this guide, we will walk you through everything you need to know about unsecured business loans in India, their benefits, eligibility, interest rates, best lenders, and how to apply.
✅ What is a Business Loan Without Collateral?
A collateral-free business loan, also known as an unsecured business loan, is a loan given without asking for any asset, property, or security. These loans are approved based on your business’s financial health, credit score, and repayment ability.
Such loans are ideal for:
- Startups and MSMEs
- Small business owners
- Women entrepreneurs
- Traders and service providers
🔍 Key Features of Collateral-Free Business Loans
| Feature | Description |
|---|---|
| Loan Amount | ₹50,000 to ₹2 Crore (varies by lender) |
| Collateral | Not required |
| Interest Rate | 9% to 24% p.a. |
| Tenure | 12 to 60 months |
| Processing Time | 2 to 7 working days (faster for fintech platforms) |
| Eligibility | Based on income, turnover, credit history |
💼 Who Offers Business Loans Without Collateral in India?
Here are the top lenders offering unsecured business loans in India:
🏦 Top Banks
| Bank | Max Loan Amount | Interest Rate (Approx.) | Processing Time |
|---|---|---|---|
| HDFC Bank | Up to ₹50 Lakhs | 10% – 22% | 3–5 days |
| ICICI Bank | Up to ₹40 Lakhs | 11% – 18% | 3–7 days |
| Kotak Mahindra | Up to ₹75 Lakhs | 12% – 20% | 4–7 days |
| Axis Bank | Up to ₹50 Lakhs | 10% – 21% | 5–7 days |
📱 Leading Fintech/NBFCs
| Fintech/NBFC | Max Loan Amount | Unique Benefit |
|---|---|---|
| Lendingkart | ₹50 Lakhs | Fast disbursal, minimal paperwork |
| Indifi | ₹50 Lakhs | Focus on small businesses |
| FlexiLoans | ₹1 Crore | No collateral, tech-enabled approval |
| Razorpay Capital | ₹25 Lakhs | For online & digital businesses |
| NeoGrowth | ₹75 Lakhs | Cash-flow-based underwriting |
💡 Government Schemes Offering Collateral-Free Loans
1. MUDRA Loan (Under PMMY)
- Offered by banks under the Pradhan Mantri MUDRA Yojana.
- For micro and small enterprises.
- Categories: Shishu (up to ₹50,000), Kishor (up to ₹5 Lakh), Tarun (up to ₹10 Lakh).
- No collateral required.
2. CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises)
- For micro and small businesses.
- Government provides credit guarantee to banks/NBFCs.
- Loans up to ₹2 Crore without collateral.
3. Stand-Up India
- For women and SC/ST entrepreneurs.
- Loan amount: ₹10 Lakhs to ₹1 Crore.
- Collateral-free support with bank guarantee.
📋 Eligibility Criteria for Unsecured Business Loans
| Criteria | Requirement |
|---|---|
| Business Vintage | Typically 1–3 years (varies by lender) |
| Annual Turnover | ₹10 Lakhs to ₹1 Crore (based on loan amount) |
| CIBIL Score | 650+ for individuals and business |
| Age | 21–65 years |
| Ownership Type | Proprietorship, Partnership, Pvt Ltd, LLP |
🔎 Pro Tip: Maintain a good credit history, file regular GST/IT returns, and keep your bank statements clean to improve loan approval chances.
📑 Documents Required
| Document Type | Examples |
|---|---|
| KYC | PAN, Aadhaar, Passport/Voter ID |
| Business Proof | GST certificate, Trade license, Udyam Registration |
| Financials | Bank statements (last 6-12 months), ITR returns |
| Ownership Docs | Business address proof, Rent/Utility Bill |
| Others | Partnership deed, MOA/AOA (if applicable) |
🧾 Interest Rates & Charges
Interest rates for unsecured business loans vary based on credit risk. Here’s a typical range:
| Loan Type | Interest Rate | Processing Fee | Pre-Closure Charges |
|---|---|---|---|
| Bank Loan | 10% – 20% | 1% – 2% | 2% – 5% |
| NBFC/Fintech | 12% – 24% | 1.5% – 3% | 3% – 5% |
| MUDRA/CGTMSE Loans | 7.5% – 12% | Nil or minimal | As per bank policy |
💬 Note: Always read the fine print to check for hidden charges.
🚀 Benefits of Collateral-Free Business Loans
👍 No Asset Risk
You don’t need to pledge personal or business assets, which is ideal for startups or asset-light businesses.
⚡ Quick Disbursal
Many fintech lenders offer 24-72 hour disbursals, especially for repeat borrowers.
📱 100% Digital Process
Apply online, upload documents digitally, and get approval without visiting any branch.
💼 Ideal for MSMEs
Tailor-made products for micro, small, and medium enterprises with flexible tenures.
❗Things to Watch Out For
- Higher interest rates: Since there’s no collateral, lenders compensate with higher rates.
- Strict eligibility: Even a small delay in GST or ITR filing can affect approval.
- Limited loan amount: Without security, you may not get large loans.
- Repayment discipline: Missing EMIs can impact your credit score significantly.
📝 How to Apply for a Collateral-Free Business Loan
Step-by-Step Process:
- Research and Compare lenders (banks, NBFCs, fintech platforms).
- Check eligibility criteria for your business.
- Prepare documents: KYC, financials, business proof.
- Apply online or offline as per the lender’s preference.
- Wait for credit assessment, field verification (if any).
- Get sanctioned amount directly into your business account.
🧠 Tip: Use EMI calculators before applying to plan your repayment strategy.
🏁 Conclusion: Is a Collateral-Free Business Loan Right for You?
If you’re a startup, small business owner, or entrepreneur without assets to pledge, then a business loan without collateral can be the perfect financial tool to scale your operations, manage cash flow, or meet expansion goals.
🔑 Final Tips:
- Maintain a strong credit score
- Keep business documentation up-to-date
- Choose reputable lenders
- Never borrow more than you can repay
With digital platforms and supportive government schemes, getting a business loan without collateral in India has never been easier.