What is the Maximum Amount of Money That can be Borrowed for a Collateral-Free Business Loan?

For every business, funding is a major requisite for scaling and thriving. However, meeting the operational and expansion needs is not always easy. Whether starting a new garment shop, adding another food truck, adding expensive electronic items to your factory, or stocking up for the festive season, every effort needs funding. A business loan can give you the much-needed funds to add value to your business.

Today, many banks offer loanquick business loans without any collateral requirements. Now, you can boost your business growth and meet operational demands without having to surrender any asset for the loan. This useful borrowing option makes sure you never miss opportunities due to financial hurdles.

What is the maximum amount you can borrow with a business loan?

The borrowing limit for quick small business loans in India varies from bank to bank. It is generally less than that of secured loans. This difference in limit comes from the inherently higher risk that banks incur when offering loans without collateral.

Before considering a Non-Banking Financial Company (NBFC) or a fintech company, it’s advisable to first check your business loan eligibility with a reputed bank. While some NBFCs and fintech companies might offer higher loan amounts, they often come with higher interest rates and additional charges. Hence, to keep your cost of borrowing low and ensure transparency, a business loan from a bank should be your first choice.

For instance, IndusInd Bank Business Loans offer up to ₹20 lakh without requiring you to pledge any asset. Not only is the amount high, but you also get additional benefits like:

• Borrow anything between ₹2 and ₹20 lakh at competitive rates
• Easy-to-meet eligibility criteria
• Customisable loan tenure from 12 to 36 months
• Speedy processing and instant disbursal of funds
• A 100% digital application process with no need for branch visits

Apply for a business loan with IndusInd Bank and fuel your growth plans today!

Factors that impact the loan amounts you will be eligible for

The maximum loan amount is already fixed by banks based on their lending policies. However, certain factors can influence the amount you can qualify for within those limits, such as:

1. Credit score

Your credit score reflects your creditworthiness. Higher scores show a history of punctual debt repayment and make you a less risky applicant for lenders. This may let the bank offer you a business loan amount closer to its maximum limit.

2. Business turnover

Banks will analyse your business’s revenue streams and profitability through your financial statements, cash flow, profit and loss reports, and even industry trends. Consistent and growing revenue gives a positive impression to lenders that your business has the capacity to repay the loan, which can impact the loan amount.

3. Active regular GST

Lenders look for regular GST activity as an indication of a stable and active business. Businesses that consistently file GST returns on time are perceived as more reliable and transparent, thus increasing their eligibility for higher loan amounts.

4. Dedicated office set up

Having a dedicated office set up in place for your business, as opposed to a residential office, demonstrates professionalism and stability. Additionally, a permanent name board at your office location signifies a long-term commitment to the business and enhances credibility.

5. Debt-to-income ratio

This ratio assesses your monthly debt obligations against your income. A lower ratio indicates a better balance and can positively influence the loan amount you qualify for, as it suggests a higher capacity to take on and repay new debt.

Key takeaways

Securing a business loan in India is easy due to the online application process. All you have to do is apply online, fill out the form, submit financial details, and await disbursement. However, to ascertain the maximum loan amount your business is eligible for, you have to keep certain factors in mind. These include your business’s financial history, revenue consistency, regular GST returns, a dedicated office set up, and your credit score.

So, take the necessary steps to improve your creditworthiness and financial stability to make sure you can secure the necessary funding when you need it most.