An unsecured business loan is a loan that doesn't require security. A secured loan uses assets as security — which means if things don't work out, the lender can sell the assets to recoup the cost of the loan. The question of 'secured vs. unsecured loans' is really all about risk for the lender.

Business loans are basically processed based on
- Business Stability
- Sales and Profits
- GST filing
- Banking Behaviour
- Credit History

Zero Collateral : One of the most important advantages of an unsecured business loan is it does not need any collateral for security. This makes it perfect for small or medium-sized businesses that do not have any great assets in business as they have just started out or are struggling to continue its business.
The loan process is easy: The procedure to apply for the loan is simple and easy and can be done by anyone without any technical knowledge. It can also be done online through a lender website or by going to the local branch. There is a high approval rate for unsecured business loans if you fulfil the minimum eligibility criteria
Offers flexibility: A collateral-free business offers great flexibility as it offers a unique Flexi loan feature. This feature helps business owners to get loans as per their requirements and repay when they have enough cash flow. It also provides the option to pay only the interest as the EMI and the principal amount can be paid at the end of the loan term.
Very less documentation: The process of getting these unsecured loans is hassle-free as there are minimum documentation and less paperwork.
Loan disbursal is quick:Due to less paperwork needed for processing the application the loan disbursal is faster and that helps when businesses are in need of quick cash. The same is not true with secured loans as they have to verify the assets and their related papers.
No restrictions on usage:While the secured business loans can be availed only after specifying the objective of the loan, unsecured loans have no such regulations. The borrower can use the money as deemed fit but should be used for business expenses.
Short Loan Tenure:While the secured Loans Minimum Repayment period offered by lenders would be 10 Yrs., Whereas unsecured business loan is offered for shorter Tenure which ranges from 12 months to 60 Months, where the business owners can enjoy the benefit of low rate of interest payable for the total tenure when compared to secured loans, and also they can be debt free within short period.

Loan to Value : The loan approved by the lenders depends upon the value of the collateral offered by the Business owner. Generally lenders approve only 50% to 60% of loan amount against the value of the collateral. However Lender hypothecate the total collateral on its name, hence in case of any repayment issues, the client has to fore give his total collateral.
Longer Loan Tenure: Longer repayment terms might be considered a con, depending on your point of view; with longer repayment terms, you will be in debt longer. And also if we calculate the interest the client is paying for the total loan period, it would be the double of loan amount of which client had availed.
Cost of availing the Secured Loan: In order for a secured loan to get processed, there are many charges involved like

   a) Cost of Valuation report of the offered collateral
   b) Cost of Legal Report of the offered collateral
   c) Cost of Technical Report of the offered collateral
   d) Loan Processing Fee
   e) Insurance on the loan amount (Even though the loan sanctioned was a SECURED LOAN)
   f) Documentation Charges
   g) Entry in Encumbrance Certificate charges
   h) If the secured loan is availed in the form of OD/CC, Annual account maintenance charges along with renewal and enhancement charges are applicable

Loan eligibility: Even though the lender offers secured loan, the loan amount eligibility is again calculated as per the clients business Sales and Profits
Documentation : Lengthy Documentation process
Lengthy Process : Time taking Loan sanctioning and Disbursal Process

Business loan can be availed by the following types of Business

Proprietorship Firm : This is a form of business where the owner of business is the proprietor or the sole owner. The profits or loss of the business should be enjoyed or bear by the proprietor of the business
Partnership Firm : This form of business involves 2 or more persons, who decides to do business and take the share of profit or loss according to the terms and conditions on which they agree upon while starting the business. The firm is not owned by any partner. In order to start a partnership firm, the partners should register their firm with Registrar of firm department and avail a registration certificate
Limited Liability Partnership :Limited liability partnership (LLP) is a type of general partnership where every partner has a limited personal liability for the debts of the partnership. Partners will not be liable for the tortious damages of other partners but potentially for the contractual debts depending on the state. LLPs are popular for larger partnerships and especially for professionals, and some states only allow professionals to use the LLP format.
Private Limited Company : This is another form of business, where the company operations are managed by the directors and the company shares are issued to only limited number of shareholders as per the guidelines of the registrar of companies department. The profit or loss of the company is enjoyed or face by the shareholders of the company.
Public Limited Company : The public limited company should be closely held and the company shares should not be listed in the stock exchange, in order to avail the unsecured business loan.
Nature of Business :
All the above business should be involved in any one of the below mentioned activities/industries
a. Manufacturing
b. Trading : Distribution, Wholesale trading and Retail Trading
c. Service providers

Age of the applicant	Min-22 and Max -60
Current residence address proof and business address proof	The applicant should live and conduct business operations as per address mentioned in the given document proof
Vintage (Age of the business)	Minimum – 1yrs (For higher loan amount, Minimum vintage should be 3years and above)
Turnover/sales/Revenue (Reported in the Income Tax Returns)	The turnover of the Business should be Min 60 Lacs
Bank Statement	Client should be holding a current account which should be one year old
GST Registration	For any type of business and entity GST registration certificate and monthly GST filing is mandatory
Cibil Score (Credit Score)	All the Banks/NBFCs in our list needs cibil score should be 700 and above without Delay payments of existing loans or Loan settlements and write off

Basically Unsecured Business loan is calculated in different methods, which are mentioned below

Income Program:After the required documents are received from the client, firstly the eligibility is calculated under ITR Program. Here, Latest 2 Years of the Individual/Firm/company ITRs are assessed in order to compare the business trends for the past 2 years. If there are any issues like Downfall in the sales and profits made compared to previous year and present year ITR, we cannot process loan application under ITR program. The ITRs will not be submitted for the loan application process. By considering only the Banking or GST Behavior, the loan will be processed.
Banking Program:We can process unsecured Business loan just by considering only the turnover which has happened in the business current account and the average bank balance maintained in the account.
GST Program:We can also process business loan just by considering the turnover filed in the monthly GST. By applying
the Industry margins to the financial Year GST Sale, we can process the loan amount. Vendor Finance:Under this program the loan eligibility is calculated based on the companies he is doing business with. The client should be getting payments from the listed companies i.e. he should provide goods and services to the listed companies. Basically these listed companies should be having paid up and share capital of 3cr and above

CIBIL score : As mentioned earlier, any person who had availed any type of loan is directly reported to the CIBIL organization with the help of the person’s Pan Card and Aadhar card. The CIBIL organization will Score the customer by how prompt is his repayments towards the taken loan. Scoring starts from 800 and if the repayments are delayed the points gets reduced accordingly.
Cibil -1 : If the client had never taken any loan the score would automatically reflects as -1
DPDS : (Day past Due). A person who has taken loan has not paid a particular loan amount of a particular for a certain period of time Example: A person has taken car loan of Rs. 3.00 Lacs for a period of 5 Yrs in the month of Jan 2021. His monthly EMI is 6500/- Which will deducted on 5th of every month. In the month of May 2021 his EMI was bounced as there are no sufficient funds in his account, he paid the EMI on 25th of May 2021. So his EMI is Days Past due for 20 days.
Cibil Enquiries : After the file is Login with the Lender and LAN is created, the banker will request for the CIBIL report. That Request is called as Cibil Enquiry. For every Cibil Enquiry 10 points of clients cibil score will get deducted. So clients Loan application should be processed only to suitable banks/NBFCs where he will get 100% Loan approval without disturbing his CIBIL score.
Loan Settlements : If a client has taken a loan and unable to pay it back to the lender due to personal and financial reasons, he will come to the lender for a negotiation and close the loan by paying only the agreed amount. Such settlements are reported to the Cibil by the lender, and those settlements will be reflected in his cibil report.
Written off : If a client has taken loan and he has absconded without paying the loan amount back to the lender, then that loan will be strike off and will be reported to the cibil by the lender. Such Write offs are reported to the Cibil by the lender, and those settlements will be reflectedin his cibil report.
Applicant : A person or a entity who had applied for a loan is called applicant
Vintage of the business : Age of the business
NOB : Nature of the business (Manufacturing, trading or service providers) of a particular product
ROI : Rate Of Interest
Tenure : No of Months or Years by which the taken loan should be repaid
ITR : Income Tax Returns (Which is calculated on total income of the client incurred during a financial year)
Turnover/Sales/ Revenue /Gross receipts : These terms means, the total amount of sale of products and services made by the client during the financial Year.
Profit : Sales minus Expenses incurred for the sale of goods and services = Profit
Financial Year : A financial Year starts from 1st April to 31st march
Assessment Year : The Income Earned during a financial year is assessed and Taxed in the next financial year. For example : Income earned from 1st April 2020 to 31stmarch 2021 can assessed and taxed only from 1st April 2021 to 31March 2022
DSCR : Debt Service Coverage Ratio
GST : Goods and Service Tax (Type of Tax which is payable on the amount of goods and service made by the client on monthly basis)
Form 3CB and 3CD : If the Turnover made by the client for a financial year is more than 1crs, then his ledgers should be audited by a certified chartered accountant. After checking the client ledgers the CA will provide a certificate stating that the business conducted by the client is fair without any malpractices and misleading information
Banking Credits and Debits : Amount which is deposited in to your account is credits and amount taken from the account for payments is called debits
BTO : Business Turnover which is calculated by adding all the credits for the one year
Inward cheque returns : A Buyer had paid to a seller of goods through cheque. The seller had deposited the cheque in his account for clearing. During the time of clearing, the funds should be available in the buyers account. If the funds are not available then the cheque will be bounced, which is called as Inward cheque return.
ABB : Average Bank Balance. The end of the day Balance is averaged for every month for 1 year to calculate the Loan amount
EMI : Equated Monthly Instalments which contains a part of loan principal amount and part of interest amount
Margins : A pen is bought by a retailer from a wholesaler for 10rs. He had sold the same pen to his customer for 15rs. So the margin will be 5rs
Current account : this is a type of account which is opened by only business persons. All the business related payments and receipts should happen in the current account not in the savings account
OD/CC (overdraft and cash credit) account : It is a type of Loan provided by the banks by taking a security. The banker evaluates the clients Property which is offered as a security and decides a eligible loan amount. After the loan is approved, the banker will open an account called as over draft account deposits the loan amount in the account. The client cannot use the total loan amount; he can use the amount whenever it is nesseccary for his business operations and deposits any business amount which he earned. The client has to pay the interest for only the amount used for a month not on the total loan amount. a. OD is provided against properties ( residential property, commercial property, open plot, industrial property, machinery) b. CC is provided against Inventories
Existing loans : The Loans already taken by client and started repaying it

EOD  -  End Of The Day
PD  -  Personal Discussion
PF  -  Processing Fees
CR  -  Credit
DR  -  Debit
OD  -  Overdraft
CC  -  Cash Credit
DSA  -  Direct Sales Associate
DST  -  Direct Sales Team (Banks)
FI  -  Financial Institutions
FCU  -  Fraud Control Unit
RCU  -  Risk Containment Unit
FOIR  -  Fix Obligation income Ratio
DBR  -  Debt Burden Ratio
OSV  -  Original Seen Verified
BSV  -  Bank Signature Verification
BT  -  Balance Transfer
ABB  -  Average Bank Balance.
CRM  -  Customer Relationship Manager.
TVR  -  Tele verification Report.
ECS  -  Electronic Clearing System
ACH  -  Automated Clearing System.

What is the best rate of interest you can offer?
Business Loan ROI% Ranges from 9.5% Flat Rate to 13% Flat Rate, based in the Reported Business Turnover
The ROI for my OD/CC or Property loan is less than what you offer ?
the OD/CC or property loan is offered by hypothecating the offered security, OD/CC involves higher cost like, Valuation, Legal and Technical report charges, Yearly AMC charges, Yearly Renewal charges, Limit Utilization Charges. So comparing to all these charges unsecured business loans ROI will be very affordable, since above charges are not applicable for the Unsecured Business loans
My parent bank is offering me less rate of interest ?
Since you are operating your business account with your parent banker, they offer loan amount with less ROI, as all your business transactions made are always benefit to your banker
. Im already serving existing loans, I might not get eligibility ?
As long as your Reported Turnovers and profits supports the new loan, along with the existing loans repayment behaviour, any number of business loans can be availed.
My turnover has dropped than my previous year turnover; will I still get a loan?
Yes, business loan can be processed based on your banking transactions and reported GST sale for a financial year
Yes, business loan can be processed based on your banking transactions and reported GST sale for a financial year
. If the main applicant has cleared off the loan without any dues, you are eligible for an unsecured business loan. But if the main applicant has settled on written off the availed loan, it will automatically effects your UBL eligibility.
Couple of old loan EMIs was paid late. Will I still get the loan?
There should not be any EMI payments delay in the latest 6 months. Credit