Can an Unemployed Person Take a Business Loan?

Whether you are a fresh graduate or in between jobs, if you have a business idea you want to work on, a lack of finances can mean an unfortunate compromise on your dreams. No doubt, if you’re unemployed, getting a loan can be challenging.

However, today many lenders offer small business loans to encourage individuals to start their businesses. Similarly, several government schemes also extend financial assistance in the form of cash credit or loans. Here’s how you can get the financial help you need to start your business.

Estimate the loan amount

Before starting with the application process, determine your requirements first. Depending on your business, you need to handle several expenses –  from the cost of office space, inventory to hiring staff, overhead costs, and more.

Prepare a budget to avoid under or overestimating your requirements. You can use a business loan EMI calculator to estimate your monthly payments and apply for a comfortable loan amount.

Check your eligibility

Unemployed individuals can apply for a loan under several government schemes. Depending upon the scheme you apply for, check the business loan eligibility set by the lender.

Moreover, lenders evaluate your credit rating to determine your creditworthiness. So, a healthy credit score backed by a stable finance repayment history can improve your chances of securing a loan.

Write a business plan

Your business plan is another important factor when you’re applying for a loan as an unemployed borrower. A solid business plan will help establish the profitability of your business idea. Here, mention how you plan on using the funds to earn the trust of the lender, followed by the financial projections. A detailed plan will help lenders assess your business idea, and they might be interested in offering you the loan.

Apply online

Once you have decided on the loan amount and developed a business plan, apply with the lender of your choice. However, make sure to shop around and compare the loan terms offered by the lender including business loan interest rate, repayment tenure, additional charges, and more.

Besides, the application process for a loan has become simpler today. You can easily apply online on the lender’s website. After successful verification, you get the loan amount in no time!

Submit the documents

For a swift application process, prepare the necessary documents beforehand. With online application processes, verification of documents has also become very easy. All you have to do is upload the essential documentation in the given format. For an unemployed individual, lenders don’t ask for extensive paperwork. However, you will be required to submit ID proof, address proof, and a detailed business plan to complete your application.

The bottom line

If you are an unemployed individual, a business loan can give you the financial help you need to start your enterprise. While in the absence of stable income, securing a loan can be challenging with strict eligibility criteria or higher interest rates, you can still avail of a loan from several lenders.