Best Unsecured Business Loan for Startups in 2025 (Easy Approval)
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Starting a business is exciting, but securing funding can be one of the biggest challenges for new entrepreneurs. Traditional business loans often require collateral, a strong credit history, and years of financial records - resources many startups initially don’t have.
This is where unsecured business loans for startups come in. These loans have gained significant popularity in recent years. Estimates from Kotak Institutional Equities (KIE) show that unsecured loans accounted for 9.3% of the total lending business of major banks in the October-December quarter of FY24.
With the growing number of financing options available today, it can be tricky to determine which one best suits your needs. This guide covers everything you need to know about the top unsecured loan options in 2025.
What is an Unsecured Business Loan?
An unsecured business loan allows startups to access capital without pledge collateral. Approval is based on factors like credit score, revenue, and financial health rather than assets.
This financing option is ideal for startups and MSMEs in India, covering expenses such as inventory, employee wages, and operational costs. While it offers a quicker approval process, the absence of collateral often results in higher interest rates due to the higher risk for lenders.
Unsecured Business Loan Options Available in 2025
1. Term Loan
A Term Loan is a fixed loan amount provided for a specific duration, typically repaid in EMIs (Equated Monthly Installments). This loan can be short-term or long-term, depending on business needs, and is suitable for startups looking for structured repayment plans.
2. Working Capital Loan
A Working Capital Loan is designed to help startups manage day-to-day operational expenses, such as payroll, rent, and inventory. It is approved based on the creditworthiness and repayment capacity of the applicant, ensuring that businesses have sufficient cash flow for smooth operations.
3. Revenue-Based Financing
Revenue-Based Financing (RBF) provides capital in exchange for a percentage of future revenue until a set amount is repaid. Unlike traditional loans with fixed EMIs, RBF offers flexible repayments that adjust with revenue, easing financial strain during slow periods.
A major advantage of RBF is that it provides growth capital without dilution, allowing founders to retain full ownership and control. The approval process is also faster than conventional financing, enabling companies to secure funds quickly when needed.
RBF is particularly well-suited for businesses with predictable revenue, such as SaaS, subscription-based models, and e-commerce brands. Since repayments scale with revenue, companies avoid financial strain during slower periods while benefiting from a funding structure that aligns with their growth.
Apply for revenue-based financing!
4. Invoice Financing
Invoice Financing enables startups to leverage unpaid invoices to secure funding. This option helps businesses maintain steady cash flow while waiting for customer payments, ensuring that operations continue without delays.
Key Benefits of Unsecured Business Loans for Startups
- No Collateral Required: Startups can access funding without pledging assets, reducing financial risk.
- Approval Based on Creditworthiness: Lenders evaluate credit score, revenue, and repayment history rather than physical assets.
- Quick Access to Funds: The approval process is faster compared to secured loans, helping startups manage urgent expenses.
- Flexible Loan Amounts: Depending on the business size and need, loan amounts can be higher.
- Adjustable Loan Tenure: Repayment periods typically range from 1 to 5 years, offering flexibility for different business models.
Eligibility Criteria for Unsecured Business Loans
- Vintage: Most lenders require businesses to have at least 12 months of operations to qualify.
- Runway: Startups should have at least three months of operational runway to demonstrate financial stability.
- CIBIL Score: A strong credit score increases approval chances and ensures better loan terms.
- Revenue: A minimum annual revenue of 5 Cr is typically required.
Additional factors such as business cash flow, industry type, and existing debt obligations may also be considered by lenders.
Tips to Increase Loan Approval Chances
- Improve Your Credit Score: Pay off debts, make timely payments, and fix credit report errors to boost your score.
- Prepare Strong Financial Documents: Updated financial statements, including profit and loss statements and cash flow reports, help lenders evaluate your business’s stability.
- Create a Solid Business Plan: This includes revenue projections, loan utilization details, and growth strategies to assure lenders of your business’s potential.
- Choose the Right Loan Type and Amount: Overestimating funds can be a red flag, while a well-calculated request increases approval likelihood.
To determine the right loan amount, use Recur Club’s Business Funding Calculator for an estimate based on your financials.
Estimate your funding now!
Conclusion
For startups aiming to grow without the burden of collateral, unsecured business loans offer a flexible and efficient solution. Recur Club’s innovative approach empowers businesses with non-dilutive capital that’s tailored to their financial performance, not reliant on personal or business assets.
Our funding solutions are designed for a wide range of sectors, from SaaS and Gen AI, to D2C, among others. Whether you’re an established growth-stage company or an early-stage startup, our platform ensures you get the capital you need to scale with speed and ease.
One of our clients, InCruiter, a Bengaluru-based HR-tech startup, successfully used RBF capital to expand into international markets. This funding allowed them to grow their team and take their product global, all while maintaining control of their business.
With Recur Club, you don’t have to choose between scaling and ownership.
Ready to explore how we can support your growth?
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