How To Get A Loan Without High Collateral In 2025

One of the biggest challenges entrepreneurs face is securing credit without pledging heavy collateral. In 2025, while traditional banks remain cautious, new-age financing options and government-backed schemes continue to create opportunities. Whether you’re launching a startup or expanding operations, here’s how you can access funding without putting your valuable assets at risk.

1. Explore Government-Backed Loan Schemes

India continues to support small businesses through various collateral-free financing programs:

1. MUDRA Loan (under PMMY):
   Offers loans up to ₹10 lakhs under Shishu, Kishor, and Tarun categories—no collateral required.
2. CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises):
   Provides loans up to ₹2 crores without collateral through eligible banks and NBFCs. The government backs the risk.
3. Stand-Up India Scheme:
   Designed to empower SC/ST and women entrepreneurs. Offers loans with minimal or no collateral, depending on eligibility.

These schemes reduce the financial barrier for first-generation business owners and small enterprises.

2. Apply for NBFC & Fintech Loans

Non-banking financial companies (NBFCs) and fintech platforms have become popular sources of unsecured loans for businesses. Here’s why:

1. Quick approval times

2. Minimal documentation

3. No need for traditional collateral (though bank statements, ITRs, or GST returns may be required)

Leading fintech lenders: Lendingkart, Indifi, FlexiLoans, Razorpay Capital

These lenders are ideal for businesses with strong cash flow but limited physical assets.

3. Use Alternative Collateral

If you don’t own real estate or large equipment, consider using:

1. Mutual fund holdings

2. Fixed deposits

3. Gold assets

4. Life insurance policies

Many banks accept these forms of alternative security for business loans. This approach gives you access to capital while retaining ownership of high-value business assets.

4. Leverage Your Credit Score and Income Flow

A solid financial profile can sometimes substitute for collateral entirely. Lenders are more likely to approve unsecured loans if you can demonstrate:

1. A CIBIL score above 700

2. Consistent monthly income or business turnover

3. Clean repayment history

Tip: Applying with a co-applicant or guarantor can significantly increase your chances of approval and help you negotiate better terms.

5. Pitch a Strong Business Plan

For startups and early-stage ventures, a compelling business plan can make all the difference.

What to include:

1. Market opportunity and competitive analysis

2. Clear revenue model

3. Specifics on how the funds will be used

4. Risk mitigation strategies and contingency plans

A well-articulated plan builds lender confidence and can even attract private investors or venture debt.