Growing a business is no easy task and needing injection of funds at the last hour is often expected. It could be to make advance payments, manage cash flow, expand your business space, buy a new asset for business or seek a hot market opportunity. An unsecured business loan, i.e., a collateral-free loan is a typical way to raise funds. However, since it entails a financial commitment and outflow of funds in terms of interest, some research on your end is necessary.

So, if you are seeking an unsecured business loan, make a note of the following things:

• Transparency

We put this as a topmost priority as any financial relationship should be healthy. Credible lenders will offer transparency and be upfront about additional charges. You can check online for history of the lenders or seek advice from your financial planner.

As there are many unstructured lenders, it is better to opt for one that has a good track record.

• Interest rates

This is the most crucial element. Most lenders offer competitive rates, however, it is good to do some research or check with your financial advisor before selecting a lender. Interest rates differ as per the borrower's credit score, your past relationship with the lender, tenure of the loan,s type of interest, market conditions, etc. So, use these factors to your advantage to get the best interest rate for your unsecured business loan.

• Flexible policies

Starting a business comes with lot of uncertainties. A lender who understands the unique challenges of a business will offer flexible policies such as discounts, seasonal offers, waiver of fees, change in EMI pattern, etc.

• Prepayment terms

Preclosure of loans always comes with an additional cost. However, closing them off earlier may save on your interest amount. Ask for prepayment terms in advance: when it is allowed and what are the fees levied for the same. Some lenders also give you the option to prepay your loans without levying extra charges.

• Hidden fees

Hidden fees can increase your financial burden, tossing your budget away. Be wary of these hidden fees and ask upfront about the additional fees that will be levied. Read the documents carefully before you sign on any of them.

• Compare lenders

Do your homework before taking the plunge. Use online marketplaces to compare lenders with respect to their interest rates, tenure options and other eligibility terms.

• Repayment plan

While it is easy to get tempted to raise funds through an unsecured loan, ensure that you have repayment plan in place. Defaults may result in penalties and in turn, affect your business. Check for refinancing options if your current loan features are not suitable to you.

• Clean credit history

A good credit history and a healthy credit score gives you the power to negotiate for a better interest rate.Hence, ensure that you take care of existing debts, clear all credit card dues and plan for a healthy financial health. Remember that every loan application will affect your credit score. Hence, opt for soft enquires, such as online marketplaces, before applying for a loan.

In short, preparedness is the secret ingredient for bagging an unsecured business loan that is favourable for you and your business.

• Seasonal offers

Some lenders announce season offers such as loans at discounted prices, low interest ratesor waiver of application fees. Always be vigilant and check for such offers, they can turn out to be great cost savers for your business.

• Type of applicant

The government announces various types of loan schemes for small business owners and women entrepreneurs. If you fall into any of these categories, you can avail attractive offers at a lesser price.

Some of the popular government schemes include:

• Mudra Loans: Small amount refinancing loans for micro entrepreneurs of varying business sizes.
• Stree Shakti Package: This scheme emphasizes on encouraging women entrepreneurship.

• Other industry trends

Lenders will study your revenue model, financial capacity to repay the loan and industry trends to gauge whether they should or should not offer you credit. Ensure that you have answers to all these questions with proof. With the help of your advisor, chart out a financial model that will exhibit viability of your business to the prospective lender. A little extra effort on your part will showcase your credit worthiness and ability to be a healthy financial organization.

Many non-traditional financial institutions today offer loans at attractive rates and favourable termsto small business owners. Less paperwork, minimal documentation and faster processing-all this is no longer a distant dream. In fact, you can raise funds in a matter of few minutes if you have a have a good credit history.

In short, availing an unsecured business loan is no longer that difficult as it was in the earlier times. The above points will serve as a checklist before opting for a loan.