Business loans are of two types: secured and unsecured. Secured loans need security against which a loan amount is approved, and unsecured loans are collateral-free. Before taking a loan, always check the eligibility for the business loan you are applying for in advance. 

You can take a few steps to increase the likelihood that a business loan will be approved before applying. You also need to understand the eligibility criteria for a business loan and identify the loan type that most closely matches your needs.

• Various loan types:

Applicants can select from a selection of MSME and SME loans, working capital loans, or business loans without collateral, depending on the size of their organization and particular demands.

• Ensure you’re eligible:

Even though business loan requirements differ, the following four factors are likely to be taken into account by lenders when evaluating your business loan application:

1. Credit score – Lenders favor candidates with a good credit history and a score of at least 700. Negative credit history can be a warning sign for lenders.
2. Collateral – Some lenders ask for collateral, which they can seize if you don’t repay the loan. Some, however, offer business loans without security.
3. Your total annual sales are also taken into account by many lenders. 
4. Time in business- An online lender usually requires a business to be operational for at least a year, while a traditional financial institution typically requires at least two years.

• Repayment capacity:

The borrower repays the principal amount borrowed from the financial institution and the interest that accrues on that principal during the loan’s term. To calculate the estimated monthly repayment amount, most lenders now offer a free online business loan EMI calculator.

Get a collateral-free business loan today through various lending apps or websites.