If you are an entrepreneur or a new business owner, finding the right capital is often the biggest hurdle to growth. Many MSMEs and early-stage companies prefer an unsecured business loan for startup because they either don't have assets to pledge as collateral—or don't want to risk their personal property.
A without security business loan, also known as unsecured business funding, is a financing solution where banks, NBFCs, or financial institutions provide capital based on your business's strength rather than physical collateral.
In this comprehensive guide, we'll provide you with all the essential information about unsecured business loans, including:
- What an unsecured business loan is
- Why businesses choose without security business loans
- Key features and comparison
- Eligibility criteria for startups & MSMEs
- Types of unsecured business funding available
- How to apply step-by-step
- Options for new startups
- Advantages and disadvantages
- How Enego can help you
If you want help understanding which lender offers the best unsecured business loan for startup profiles, our consultancy team can assist you with personalized lender matching.
What is an Unsecured Business Loan?
An unsecured business loan is a financing product where the borrower receives funds without pledging any collateral such as property, machinery, fixed deposits, or gold.
For those wondering how to get an unsecured business loan, the process focuses heavily on your business's financial health and creditworthiness.
✔ Key Features of Unsecured Business Funding:
- ✓No collateral required: Protects your personal and business assets.
- ✓Borrower assessment: Based on cash flow, business registration, and ITR.
- ✓Speed: Much faster approval & disbursement than secured loans.
- ✓Purpose: Ideal for working capital, hiring, or scaling operations.
Why Businesses Choose Without Security Business Loans
Startups and MSMEs prefer collateral-free funding for several reasons:
Asset Protection
No risk to personal or business property.
Early Growth Stage
Most startups are asset-light and don't own land or heavy machinery yet.
Speed of Capital
When you need to raise funds for a startup in India, waiting months for property valuation is not an option.
Flexible Usage
Can be used for digital marketing, payroll, or inventory.
Key Features & Comparison
Loan Comparison
| Feature | Details |
|---|---|
| Collateral Requirement | None (Fully Unsecured) |
| Loan Amount | ₹50,000 to ₹50,00,000 (Higher for established profiles) |
| Interest Rate | 11% – 28% per annum |
| Processing Time | 24 hours to 7 days |
| Repayment Tenure | 1 – 5 years |
| Best For | Working capital, growth strategy, marketing, payroll |
Not sure how much unsecured business funding you qualify for? We can evaluate your documents and provide an estimated loan limit.
Who Can Apply? (Eligibility for Startups & MSMEs)
While these loans don't require security, lenders are stricter with financial eligibility.
Eligibility Requirements
| Criteria | Details |
|---|---|
| Business Vintage | Typically 2–3 years (though some NBFCs fund 1-year-old startups) |
| Turnover | Minimum ₹10–30 lakhs annual turnover |
| Credit Score | A CIBIL Score of 700+ is usually preferred |
| Business Structure | Proprietorship, Partnership, LLP, or Pvt Ltd |
| Compliance | Having an MSME Certification can significantly improve your chances |
Confused about which instrument fits your needs? Our MSME Growth Advisory session can help you map out your funding journey.
Types of Unsecured Business Funding Available
There are various funding instruments for startups that fall under the "without security" category:
Business Term Loans
Lump-sum funds for a fixed tenure.
Business Overdraft (OD)
A flexible limit where you pay interest only on what you use.
CGTMSE Loans
A government-backed MSME scheme providing collateral-free loans up to ₹2 Crores.
Invoice Discounting
Get immediate cash against your unpaid invoices.
Micro-Grants
For very early stages, consider looking into the Spark Grant or Grant for Ventures.
How to Get an Unsecured Business Loan: Step-by-Step
If you are looking to apply, follow this professional roadmap:
Financial Health Check
Ensure your bank statements are clean with consistent credits.
Documentation
Gather KYC, GST certificates, and 12 months' bank statements.
Choose the Right Lender
Decide between traditional banks or faster fintech NBFCs.
Application
Submit your file through a consultant to avoid multiple hard inquiries on your credit score.
Verification & Approval
The lender will conduct a digital or physical site visit.
Can New Startups Get a Without Security Business Loan?
Yes, but the approach is different. Since most banks require 2-3 years of history, new startups should explore:
Government Schemes
Such as the UYEGP Scheme or the Mahila Empowerment Scheme for women.
Venture Tech Funding
For high-growth tech startups, Venture Tech Funding might be a better fit.
Incubation Grants
Look into programs like MeitY GENESIS.
Advantages and Disadvantages Of Unsecured Business Loan
Advantages
- No collateral or asset risk
- Fast processing (Great for urgent funding)
- Minimal paperwork compared to home loans
- Flexible Usage: Can be used for digital marketing, payroll, or inventory
Disadvantages
- Higher interest rates than secured loans
- Shorter repayment tenures (1-5 years)
- Stricter CIBIL and turnover requirements
- May require MSME registration
How Enego Consultancy Helps You Secure Funding
Navigating the world of unsecured business funding can be overwhelming. At Enego, we simplify the process by:
Eligibility Assessment
Assessing your eligibility before you apply to prevent rejections.
Document Preparation
Helping you structure your loan file professionally.
Specialized Guidance
Guiding you toward specialized schemes like the AHIDF Scheme or Agri-Sure Fund if you are in specific sectors.
Transparency
Providing transparency—read the truth about Enego services to see how we help businesses grow.
Ready to get your unsecured business loan approved? Contact Enego today for expert guidance!
FAQs – Unsecured Business Funding
How can I get an unsecured business loan for a new startup?
While difficult, startups can get funding through government schemes like CGTMSE, micro-loans from NBFCs, or by showing strong startup health metrics.
What is the maximum amount for a without security business loan?
Typically, you can get up to ₹50 Lakhs. However, under specific government-backed schemes, this can go up to ₹2 Crores.
Does a low CIBIL score affect my application?
Yes, for unsecured loans, CIBIL is the primary trust factor. A score below 650 may lead to higher interest rates or rejection.
Are there specific loans for women entrepreneurs?
Yes, there are several government schemes for women entrepreneurs that offer collateral-free options.
Conclusion: Is an Unsecured Loan Right for Your Startup?
An unsecured business loan for startup success is often the catalyst needed to move from a small operation to a market leader. Whether you need a without security business loan for immediate inventory or long-term expansion, the key is preparation and choosing the right lender.
If you're ready to take the next step, our specialists are here to guide you from documentation to disbursement.
Stop worrying about collateral. Contact Enego today for a seamless unsecured business funding experience.
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