What is an Unsecured Business Loan?

An unsecured business loan is a type of loan that does not require collateral or security. The loan is usually granted based on the borrower's creditworthiness, income, and business history. The loan is usually used for short-term investments such as inventory purchase, marketing expenses, or to manage cash flow.

How to Calculate EMI for an Unsecured Business Loan?

To calculate the EMI for an unsecured business loan, you need to know the loan amount, interest rate, and the loan tenure. You can use an online EMI calculator to calculate the EMI for your unsecured business loan. Alternatively, you can use the following formula to calculate the EMI manually:

EMI = [P x R x (1+R)^N]/[(1+R)^N-1]

Where: P = Principal amount R = Rate of interest per month N = Loan tenure in months

Steps and Documents Required to Get an Unsecured Business Loan:

Here are the steps and documents required to get an unsecured business loan:

Step 1: Determine your loan requirement - The first step is to determine how much money you need for your business.

Step 2: Check your eligibility - The next step is to check your eligibility for the loan. This includes factors such as your credit score, income, age, and business plan.

Step 3: Choose the right loan - There are various types of loans available in India, such as term loans, working capital loans, equipment financing, and more. Choose the right loan that suits your business requirement.

Step 4: Gather the necessary documents - Once you have chosen the loan, you need to gather the necessary documents, such as business registration documents, ID proof, address proof, financial statements, and business plan.

Step 5: Apply for the loan - You can apply for a loan either online or offline, depending on the lender's policies.

Step 6: Verification and approval - After you have applied for the loan, the lender will verify your documents and eligibility. If everything is in order, your loan will be approved.

Step 7: Disbursement of funds - Once your loan is approved, the funds will be disbursed to your account.

When is an Unsecured Business Loan Required in Business and Its Effect on the Balance Sheet?

An unsecured business loan is required when a business needs to make a short-term investment, such as inventory purchase, marketing expenses, or to manage cash flow. An unsecured business loan has a significant impact on the balance sheet of a business. The loan amount is considered as a liability on the balance sheet, and the repayments are considered as cash outflows. The interest paid on the loan is considered as an expense, which reduces the profits of the business.

Prevailing Rate of Interest by Various Companies in India:

The prevailing rate of interest for an unsecured business loan varies depending on the lender, loan amount, tenure, and credit score. Here are the prevailing rates of interest offered by some popular financial companies in India for unsecured business loans:

1. State Bank of India - Interest rates start from 9.50% p.a.

2. HDFC Bank - Interest rates start from 15% p.a.

3. ICICI Bank - Interest rates start from 16% p.a.

4. Axis Bank - Interest rates start

5. Axis Bank - Interest rates start from 15.50% p.a.

6. Bajaj Finserv - Interest rates start from 19% p.a.

7. Kotak Mahindra Bank - Interest rates start from 11% p.a.

8. IndusInd Bank - Interest rates start from 16% p.a.

9. Yes Bank - Interest rates start from 10.99% p.a.

10. IDFC First Bank - Interest rates start from 11.50% p.a.

11. Standard Chartered Bank - Interest rates start from 10.99% p.a.

Please note that the interest rates mentioned above are subject to change and may vary depending on the loan amount, tenure, credit score, and other factors. It is recommended to check with the lender for the latest interest rates before applying for a loan.