Unsecured Business Loans

Facility size	₹20–150 crore. Below ₹10 crore, your existing bank or a retail platform is usually the more efficient route.
Security	No specific asset is mortgaged or pledged. A personal guarantee from the promoters is standard, along with negative covenants on fresh borrowing and charges.
Indicative pricing	13–18% a year from NBFCs and private credit; processing fees of 0.5–2%. Secured debt on the same balance sheet typically prices at 9.5–14%.
Tenor	One to five years, usually with monthly or quarterly amortisation. Longer tenors are rare without security.
Lenders	NBFCs, AIF Category II debt funds, and private credit funds. Some banks do unsecured term debt, generally for existing customers with a long banking history.
Typical eligibility	₹50 crore or more in revenue and two to three years of audited profits, for facilities of this size. Clean bureau record for the company and each promoter.
Timeline	Four to twelve weeks is the market standard. Clean mandates have moved from first conversation to disbursement in as little as 2–10 days.

What "unsecured" actually means in India

It means no specific asset is mortgaged, hypothecated, or pledged to the lender. It does not mean the lender has no recourse. Almost every large unsecured facility in India carries a personal guarantee from the promoters, which puts personal assets behind the company's obligation. Where the borrower sits inside a group, a guarantee from the holding company or a stronger operating company is common as well.

The second thing that replaces collateral is the covenant package. Expect a negative lien — an undertaking not to create fresh charges on your assets — plus a ceiling on total debt, minimum coverage and leverage ratios tested quarterly or annually, restrictions on dividends and related-party outflows, and sometimes a cross-default clause that links this facility to your other borrowings. Read the covenants before you read the rate. A cheap facility with a tight ratio test can cost you more than an expensive one with room to breathe.

If the guarantee is the part you want to understand properly, we wrote a full guide: personal guarantees in business loans.

How much unsecured debt can my company raise?

As a working rule, established profitable companies raise unsecured facilities of roughly 15–25% of annual revenue. A company doing ₹300 crore of revenue would usually be looking at ₹45–75 crore of unsecured capacity, spread across one or more lenders.

That number is then capped by leverage. Lenders size total debt at roughly 3 to 4.5 times EBITDA depending on the sector, and subtract what you already owe. A company with ₹36 crore of EBITDA therefore carries total capacity of about ₹110–160 crore. If ₹90 crore is already drawn, the headroom is ₹20–70 crore, not what the multiple alone suggests. Whichever of the two tests binds first is your real answer, and existing debt is usually the one that binds.

Two other factors move the number. Concentration — most lenders will not want to be more than a modest share of your total debt on an unsecured basis, so large asks get split. And end use: growth capex and working capital support a bigger number than refinancing or promoter-level requirements.

What lenders look at

Unsecured credit is underwritten on cash flow and conduct rather than on assets. Six things carry most of the weight:

• Revenue trend and EBITDA margin. Direction matters as much as the level. Flat revenue with improving margin reads better than growth bought at falling margin.
• Cash-flow quality. Banking turnover against declared revenue, and whether the two reconcile. Credit teams look at monthly balances, cheque returns, and how long cash actually sits in the account.
• Existing debt and coverage. Total leverage, the repayment schedule already committed, and debt service coverage after this facility is added.
• Bureau record of the company and each promoter. Personal delinquencies of a promoter routinely sink an otherwise clean corporate file, so check both before you approach anyone.
• Sector. Every lender runs internal caps and internal views. The same file gets three different answers across three lenders purely on sector appetite that quarter.
• End use of funds. Capex, working capital, and acquisition funding are straightforward. Repaying promoter borrowings or funding a related entity is the hardest use to get approved.

When unsecured is the right choice — and when it isn't

Unsecured is right in three situations. When your cash flows are strong but you have little that can be pledged — a services business, an asset-light manufacturer, a company whose property is already charged. When speed matters, because removing title diligence and valuation from the process removes weeks. And when you want to keep your unencumbered assets free for a larger raise later, rather than tying up a ₹100 crore property to raise ₹25 crore today.

It is the wrong choice in two. If you own clean, unencumbered property, a loan against property will usually price three to four percentage points lower and run for a much longer tenor — on a ₹50 crore facility that difference is real money, and it is worth the extra few weeks. If the property is leased, lease rental discounting is normally cheaper still. And if your cash flows are lumpy — project-based revenue, long receivable cycles, seasonal swings — a covenant-heavy unsecured facility with fixed monthly amortisation puts you one bad quarter away from a breach. A working capital line that flexes with the cycle is the safer instrument.

Documents you'll need

Having this set ready before anyone is approached is the single biggest determinant of speed. Incomplete files, not credit quality, cause most delays.

• Audited financials for the last three years, with schedules and notes
• Current-year provisional financials, ideally to the most recent completed month
• Income tax returns for three years, company and promoters
• GST returns for the last twelve months
• Bank statements for the last twelve months, all operating accounts
• Existing sanction letters and the repayment track record against them
• KYC of the company and of each promoter and director
• Promoter net-worth statement, with supporting asset detail
• MOA and AOA, and a board resolution authorising the borrowing

How the process works

1. First conversation. Thirty minutes on what the business does, what the money is for, what you own, and what you already owe. You get an honest read on what is raisable, from which pool, at what realistic pricing and speed. No fee, no obligation.
2. Sizing and file preparation. The ask is fixed at a number lenders will actually fund, not the number you hope for. The file is built once, properly — financial summary, cash-flow view, existing debt schedule, end use, and the questions a credit committee will ask, answered in advance.
3. Parallel lender process. Three to five matched lenders are approached at the same time. Competition is what moves pricing and covenants. Approaching lenders one after another costs weeks and gives away the only leverage you have.
4. Term sheets and negotiation. Offers are compared on all-in cost and terms, not the headline rate: processing fee, guarantee scope, covenant tests, prepayment charges, cross-default, and any conditions that would restrict future borrowing.
5. Sanction to disbursement. Credit committee, documentation, conditions precedent, drawdown. On a clean unsecured file this is the fastest stage, because there is no security creation to wait on.

Common questions

Do I need to give a personal guarantee?

Almost always. On a large unsecured facility the promoter guarantee is what replaces collateral, and it gives the lender recourse if the company defaults. Some lenders will cap the guarantee in value, or agree to review it after a period of clean servicing. Where the borrower sits inside a larger group, a guarantee from the holding or an operating company is also common.

Can a loss-making company raise unsecured debt?

Rarely, and the exceptions are narrow. A single loss year caused by a non-cash write-off, a completed capex cycle, or a one-off event can still be funded if operating cash flow holds up — usually at the top of the pricing range with tighter covenants. Structural losses with no credible path to profit will not clear an unsecured credit committee. There, a secured structure is the honest answer.

How fast can an unsecured facility close?

Market standard is four to twelve weeks. Unsecured moves faster than secured because there is no title diligence or property valuation in the critical path. With complete documents and the right lender pool, clean mandates have moved from first conversation to disbursement in as little as two to ten days. Most delays are self-inflicted: an incomplete file, or lenders approached one at a time.

Bina property ke business loan mil sakta hai?

Haan, mil sakta hai. ₹20 crore se upar ke unsecured loans mainly NBFC, AIF debt funds aur private credit se aate hain. Company ki cash flow strong honi chahiye aur do se teen saal ki audited profits chahiye. Rate secured loan se zyada hota hai, indicatively 13–18% saalana. Promoter ki personal guarantee lagbhag har case mein lagti hai. Agar clear property hai toh LAP aksar sasta padta hai.

More on how large raises work in practice: our FAQ on large business loans in India and the longer guide on raising unsecured debt in India.

Pacewell Capital is a debt advisory and arranger, not a lender. All loans and facilities described here are provided by RBI-regulated banks, NBFCs, and funds, subject to their own credit approval, diligence, and documentation. Interest rates, loan-to-value ratios, and timelines stated on this page are indicative market ranges as of July 2026 and are not offers or commitments.