Entrepreneurs often choose unsecured loans to start their businesses. Many apply for these loans because of the easy requirements and the lengthy loan terms. Moreover, entrepreneurs can obtain a significant loan amount to use as capital for their businesses.
Unsecured startup business loans are indeed one of the best options for running a business. As a result, many lending institutions compete to provide convenience to entrepreneurs, especially startups.
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To understand the benefits and options of unsecured startup business loans, please read the following explanation.
Benefits of Unsecured Loans
According to OK Bank, you can enjoy the following benefits:
1. Easier Application Requirements
As mentioned earlier, one of the reasons many people decide unsecured loans is because of their easy requirements. Unlike other loans or credits, unsecured loans do not require collateral. This means that these institutions are considered highly advantageous because no sacrifices need to be made.
Moreover, the loan application process is not burdensome. Borrowers only need to submit a few documents and personal information, such as their ID card, tax identification number, payslips, and bank statements. Additionally, borrowers can also apply for loans online from their homes.
2. Quick Disbursement of Funds
Not only is the application process easy, but the disbursement of funds through unsecured loans is also fast. Once the loan is approved by the bank, the funds will be directly transferred to the borrower’s account.
Usually, the fund disbursement process only takes two to three business days. After the funds are available, borrowers can immediately use them to meet various needs.
3. Flexible Loan Term
The repayment period for unsecured loans is quite flexible. Borrowers can choose a loan term ranging from three months to sixty months or even up to five years.
When applying for a personal loan, borrowers can determine and adjust the required time frame. This allows borrowers to avoid concerns about repayment periods that are either too short or too long.
4. Easy to Find
The final benefit of using unsecured startup business loans is that they are easy to find. You can apply for these loans through banks or fintech companies. This way, prospective borrowers will not have trouble finding lending institutions.
The only thing to consider is which institution you want to apply to. Remember that each bank or fintech company has its own regulations, including application requirements, disbursement processes, loan terms, and interest rates. In other words, prospective borrowers need to gather information about these details to ensure that their loan applications are approved by the bank or fintech company.
Options for Unsecured Startup Business Loans
After learning about the benefits of unsecured startup business loans, let’s now explore the options or types of collateral-free loans that you can consider. Here are several points to note:
Unsecured Personal Loan (KTA)
The first type of loan you can apply for is an Unsecured Personal Loan, often abbreviated as KTA. Typically, this type of loan is offered by banks, and each bank has different policies regarding interest rates, loan limits, and tenures for KTA.
Although the process is relatively easy and quick, the bank will conduct an interview and credit check (BI checking) before approving the loan application. This is done to assess the borrower’s credit score and ensure that there is no history of loan defaults from previous borrowing activities.
People’s Business Credit (KUR)
If your startup operates in industries such as manufacturing, forestry, agriculture, fisheries, or maritime, you can consider applying for People’s Business Credit or KUR. This program is a government grant channeled through several state banks. The government initiated the KUR program to promote economic development in various regions.
KUR offers loan limits of up to IDR 500,000,000 (Indonesian Rupiah). The interest rate is low at 0.58% per month or 7% per year, with a maximum tenure of 6 years. This program is accessible to various segments of society due to its favorable interest rate and tenure.
However, KUR is highly sought after, leading to a more rigorous loan approval process. Before approving a KUR application, banks assess the feasibility, prospects, and potential of your business, as well as your repayment capability.
Cooperative Savings and Loan (KSP)
Another option for unsecured startup business loans is Cooperative Savings and Loan or KSP. This financial institution operates based on principles of family and mutual assistance. To obtain an unsecured loan, you need to become a member of the cooperative since cooperative funds are limited for the benefit of registered members.
The membership process in a cooperative is relatively straightforward. You simply need to apply for a loan, and your status will change to prospective member. As a member, you are required to pay membership fees to contribute to the cooperative’s funds.
Loan amounts, tenures, and interest rates vary widely depending on the policies of each cooperative. Therefore, it’s important to gather information about these details before applying for a loan to avoid difficulties in repayment.
Peer-to-Peer (P2P) Lending
The last option for unsecured startup business loans is P2P lending. Peer-to-peer lending is a platform that connects lenders and borrowers online for credit transactions.
Before applying for a loan, you need to register with the P2P lending platform. The registration process is simple and only requires personal documents such as ID card, tax identification number, pay slips, and family card.
You are free to request a loan amount, interest rate, and tenure according to your initial business capital needs. The process is straightforward: just enter the desired loan amount on the platform, and there will be investors who provide funding to your P2P account. Repayment can also be done through the P2P lending application, so you don’t have to worry about the funds being lost or misplaced.
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These are the benefits and options for unsecured startup business loans. We hope this information is helpful to you.