Business owners looking for funding options without pledging any collateral can apply for unsecured business loans. This business loan type is mainly aimed at MSME owners and carries several advantages. 

One of the primary reasons it is preferable for MSME owners is that it doesn’t require the individual to pledge their assets as collateral. Furthermore, with the advancement of technology, unsecured business loans can be availed in term loans, overdraft facilities, etc. 

However, it is best to assess a funding source before sending an application, which is why here are some of the pros and cons of an unsecured business loan in India.

Pros

1. No collateral is necessary
2. Flexibility of fund usage 
3. Value of asset isn’t a constraint 
4. Simple application process

Cons

1. Higher rates of interest 
2. Loan disbursal amount is smaller
3. Eligibility criteria must be met 

So, business owners must consider these factors before sending an application for an unsecured business loan. Moreover, one must consider the repayment capacity of the company and tenor available for repayment before applying for the same.