How to Get a Business Loan Without Any Collateral in India?

When you start something new, banks ask for property papers, machinery, or deposits. But what if you don't have anything to give? That’s where collateral-free business loans come in.

In 2025, over ₹32,60,000 crore worth of loans have been disbursed under schemes that don’t ask for security. From small traders to young tech founders, many Indians now fund their business without risking their land or gold.

This guide will explain how to get a business loan with zero collateral, good ones, and how to qualify.

What is a Collateral-Free Loan? 

When a bank gives money without asking for property or assets as backup, that is a collateral-free or unsecured loan. These are given based on your business cash flow, plan, and credit score. If you are new, some government schemes back you with a guarantee.

Let’s look at how it compares:

This is why newer entrepreneurs prefer unsecured loans. It gives freedom. And more people can apply, even if they rent their homes.

Main Schemes That Can Help You

India now has more support for MSMEs than before. A few schemes allow easy access to money for people who run small companies or want to launch a startup.

CGTMSE (Credit Guarantee Fund Trust)

This is for micro and small enterprises. You can get up to ₹5,00,00000 loan. Government guarantees 75% to 85% of it.

MUDRA Yojana

If your loan is under ₹10,00,000, you can go under this scheme. It's divided into:

• Shishu: Up to ₹50,000
• Kishore: ₹50,001 to ₹5,00,000
• Tarun: ₹5,00,001 to ₹10,00,000

Read More – What Is Collateral? Meaning, Types & Use in Secured Loans
 

Stand-Up India

Loans between ₹10,00,000 and ₹1,00,00,000 for SC/ST and women starting greenfield businesses.

Here's a quick table:

Government has made these to push business growth. You just need proper documents and a basic plan.

Bank and NBFC Options to Explore

Not just government, private banks and NBFCs are giving unsecured loans too. They check your bank flow, GST returns, and credit score.

Let’s look at top providers in 2025:

Let’s say you apply for a ₹20,00,000 loan from Flexiloans. You run a textile shop. You get the loan at 16% interest for 36 months.

Monthly EMI = ₹70,436 approx.

Your total repayment = ₹25,35,696.

That’s ₹5,35,696 extra. But if your business makes ₹1,00,000 a month in profit, it’s manageable.

So, always match loans with income.

How to Prepare Before You Apply? 

Don't rush into applying. Preparation saves time and improves chances.

Business Plan

Even if you are small, write how much you make, who are your customers, where the loan will be used.

Score

Try to keep your score above 700. Pay card bills and EMIs on time. If new, open a small credit line.

Income Proof

Share bank statements of 6-12 months. More inflow means higher chance.

Tax Filings

File ITR for at least 1 year. Show turnover and expense.

GST Filings

If you are GST registered, banks trust you more.

Also Read  - What Is An Unsecured Loan: Features, Eligibility & Interest Rate Overview
 

Checklist:

Start early. Keep files ready. Loans can come in 2 days if you clean papers.

Exact Process to Get the Loan

Start by choosing your lender, this could be a government scheme like MUDRA or a private bank or NBFC. Then, fill out the loan application form either online through their website or offline at a branch. 

Next, submit all required documents like ID proof, income proof, and business details. After this, you’ll usually get an SMS or a call confirming your loan eligibility. If all looks good, accept the offer and sign the loan agreement. The funds will then be disbursed directly into your bank account.

If you’re applying under the MUDRA scheme, it’s best to visit your nearest bank branch for guidance. For online lenders like Flexiloans or IIFL, just scan and upload your documents.

Tip: Always compare the interest rates, loan terms, and processing fees before you say yes. A little research goes a long way in saving money and avoiding surprises.

Conclusion

Taking a loan without putting your house or land at risk is powerful. But use it with sense. Don't borrow just because it's easy.

You must have:

• Purpose
• Profit plan
• Repayment capacity

If yes, go ahead. Use government schemes if you are new. Try NBFCs if you want fast approval.

Build your business. Don’t wait for the perfect day. Start small, go smart. Money will follow.

FAQs

1. Can I get a business loan without a company registration?
Yes. You can use a shop license or Udyam certificate as business proof.

2. What if my credit score is low?
Try to improve it first. Or apply under schemes like MUDRA which look at business income.

3. How fast can I get an unsecured loan?
NBFCs approve in 24-48 hours. Banks may take 4-7 working days.

4. Are these loans also for women?
Yes. In fact, many banks offer special rate for women under Stand-Up and MUDRA.

5. Can I repay early and close the loan?
Yes. Most allow early closure after 6 months. Some may charge small fee.