Looking for Funds? Here’s How to Get Money without Collateral

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Getting funds through debt is no easy task. For a new entrepreneur, funding is the key to get your business plan off the ground. Even as a private citizen, getting a loan for your personal needs like an emergency, family wedding, day to day requirements, travelling or anything else, getting the money through loans is no simple task. As an entrepreneur or a salaried employee just starting, working for a firm getting that loan amount that is useful for you is a Herculean task. A first generation entrepreneur, more often than not, will find it difficult to give something as collateral to the bank to get the required sum issued through a loan. Similar is the case for a newly employed salaried individual. Thankfully, you need not worry too much because certain loans disburse money without any collateral. The most common among these is a Personal Loan and certain Business Loans.

What are these loans that are issued without any collateral?

A Personal Loan refers to that loan which a banking or non-banking financial company (NBFC) issues to an individual for their personal needs without asking for any collateral in return. This loan amount is to be repaid in full, plus the interest charged at a predefined rate of interest, generally, through payments made by monthly equated monthly instalments (EMIs). There is also a processing fee that the lender levies on the amount of loan disbursed.

A Business Loan is provided to a business for their various needs that require funding. These can include starting up of business activity, financing for expansion, fulfilling day to day monetary needs, purchasing new equipment and, all other activities that require money. There are certain types of Business Loans that do not require the entrepreneur to deposit collateral with the lender. The most popular and useful among all these is the Business Loan provided under the Government’s Credit Guarantee Fund Trust for Small and Micro Enterprises (CGTMSE). Other Central and State Government schemes issue loans without collateral in a bid to encourage and give backing to new entrepreneurship within their respective states.

How is a Personal Loan with zero collateral useful?

Although it is true that since the bank does not get any collateral deposit as security you cannot get a very large sum as a loan, but, a Personal Loan has a lot of benefits that loans with collateral can never have. For instance, when you take a loan against the collateral deposit, the bank formulates a lien of generally, somewhere between 50-90% of the amount of collateral deposit, and you also end up putting your assets into risk. The other problem is that you need to have an asset worthy enough to get a good amount of loan. Otherwise, you end up with a very insignificant sum. A Personal Loan solves all these problems for you. Since no collateral is involved, new business entrepreneurs and salaried individual need not worry about stressing for quality assets to put up. You get a sum based on your credit history and credit score, so banks do not care too much about the kind of assets you have.

Where can you use a Personal Loan?

A Personal Loan can be used for fulfilling any of your personal financial needs and requirements. You can invest the loan amount in your business too if you so choose to do that. The loan can be used for wedding expenses, daily expenses, emergency requirements, travel expenses, paying off outstanding loans and a lot of other things that require money. It is quite useful and advantageous for both, a private citizen and, an entrepreneur if used efficiently.

From where can you get a Personal Loan?

Almost all major public and private sector banks and many non-banking financial corporations issue Personal Loans. You can apply for a loan with any of these lenders. Some popular lenders in India are SBI Personal Loan, Bank of Baroda, Tata Capital, HDFC Bank among many others.

Can non-banking financial corporations (NBFCs) issue Personal Loans?

Yes, many NBFCs are operating in India that issue Personal Loans. Some of the most popular NBFCs like Tata Capital Financial Services Ltd, Bajaj Allianz, Muthoot Finance Ltd, Mahindra and Mahindra Financial Services Ltd, L & T Finance Limited among many others issue Personal Loans at attractive rates and great benefits. Usually, NBFCs are willing to forward loans much more easily than banks, and, they take lesser time for application processing and disbursal of the loan amount.

What are the details of the Personal Loan provided by Tata Capital?

Tata Capital Financial Services Ltd issues the Tata Capital Personal Loan. As is typical for Personal Loans, there is no requirement of any security or collateral. For salaried individuals, the minimum amount that can be applied for is Rs. 75,000, and this amount goes up to a maximum of Rs. 15 Lakhs. However, for self-employed individuals, the maximum amount that is issued is Rs. 3 Lakhs. The loan tenure ranges from 12 to 72 months. The Tata Capital Personal Loan charges a rate of interest of interest starting at 12.50%. There is a processing fee of Rs. 999 plus GST charge when the loan amount is disbursed. There are a lot of repayment options available too. Once the documents are submitted and verified the loan is disbursed quickly. There is minimal paperwork required.

What are the eligibility requirements for Tata Capital loan application?

The eligibility requirements for the Tata Capital Personal Loan depend upon various factors. At the time of application, to determine your approvable loan amount, the rate of interest and EMI each month, many factors will be taken into consideration. Some of these factors of yours that the bank will look at are:

  •  Age
  • Type of employment
  • Monthly and yearly income
  • Credit score
  • Sources of income
  • City of residence
  • Debt history
  • Reason for the requirement of the loan

All these and many other factors shall decide whether your application will be approved or not.