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A collateral-free loan refers to a loan provided to a borrower without any guarantee or security. Collateral-free loans help businesses handle their day-to-day operations and other business needs smoothly. Such loans are unsecured loans that usually carry a higher rate of interest.

There are now various options available for businesses to avail collateral-free loans in India.

Where are collateral-free business loans available in India?

In India, collateral-free loans are available under

  • Credit Guarantee Fund Trust Scheme for Micro & Small Enterprises (CGTMSE) provides micro and small enterprises collateral-free loans up to Rs. 1 crore
  • Major banks including
    • State Bank of India
    • Axis Bank
    • ICICI Bank
    • HDFC Bank

Eligibility Criteria for collateral-free business loans

  • Private limited companies who are registered as small scale enterprises (SME)/small scale industries (SSI) can apply
  • Collateral free loans available for product development expenses, purchase of tools etc
  • Proof of share allotment required
  • The share purchase agreement required

Point to Review: Collateral free business loans are available in India through CGTMSE and banks.

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