Small Business Loan for Unemployed: There are numerous reasons why unemployed individuals should be able to obtain a loan. Many financial lending institutions also offer loans to jobless people to help them to overcome their difficulties. There are a few government schemes that also provide loans and help unemployed people.
If you are an unemployed person or don’t have a stable job but are looking to avail a loan, then look no further. Because on this page, we have covered everything about “how to get a loan without proof of income.” Read this page to learn the list of government loan schemes and how to avail of them. Scroll down to find out more.
Can an Unemployed Person Get a Business Loan?
Yes, unemployed people are eligible for a business loan. However, when it comes to unemployment loans, there are various factors based on which loan will be processed. Also, the parameters such as interest rate, loan tenure, and everything else will vary when the unemployed loan is compared with the other types of loans.
Some of the unemployed loans provided by various banks, their interest rates, loan amounts, and tenure are tabulated below:
|Bank Name or Lender Name||Interest Rate (p.a.)||Loan Amount||Tenure|
|SmartCoin||20% to 36% (APR)||Rs.1,000 to Rs.70,000||91 days to 270 days|
|State Bank of India Pension Loan||9.75% to 10.25%||Rs.2.5 lakh to Rs.14 lakh||Up to 84 months|
|Punjab National Bank Personal Loan to Pensioners||9.25%||Rs.25,000 to Rs.10 lakh||Up to 60 months|
|LazyPay||18% to 25%||Up to Rs.1 lakh||3 months to 24 months|
|Bank of India Star Pensioner Loan Scheme||9.35%||Up to Rs.10 lakh||Based on lender’s terms and conditions|
|Mudra loan for women||Varies from bank to bank||Up to Rs.10 lakh||Varies from bank to bank|
|Prime Minister’s Rozgar Yojana||Based on the scheme specifications||Up to Rs.10 lakh||3 years to 7 years|
List of Government Loans for the Unemployed in India
There are multiple government loans that are specially designed for the purpose of helping unemployed people in India. Some of the government’s schemes for unemployed graduates are listed below.
- Prime Minister Rozgar Yogana: This is one of the unemployed loan schemes specially introduced for jobless candidates. The main objective of this loan is to provide unemployed graduates with financial support to start a new venture. The candidates who wish to avail of this loan must have studied eighth grade or above. The loan amount varies based on the composite of the business. Any individual applying for this loan will be able to secure a loan amount of between 2 lakhs and 8 lakhs.
- Unemployed Agriculture Loan: Several banks are collaborating with bank officials to provide agricultural loans to jobless people. Agriculture students who are 22 or older can avail of the loan under the scheme “Agriculture Loan for Unemployed”.
- Tamil Nadu NEED Loan for Unemployed: The officials of the Tamil Nadu government scheme have introduced a scheme named the New Entrepreneur and Enterprise Development Scheme (NEED) for jobless candidates. Under the NEED scheme, the state government of Tamil Nadu provides 25% of the subsidy for the total loan they have availed. However, collateral for these loans is decided by the bank officials. To avail of this loan, the applicant’s project cost must be estimated at between 5 lakhs and 1 crore. Also, it is important to note that the infrastructure cost of the project cannot exceed 25% of the loan.
- West Bengal Unemployed Loans: All applicants between the ages of 18 and 45 will be eligible to apply for cash loans for the unemployed offered by the West Bengal government. The applicants will be able to avail Rs. 50,000 under this loan. The main objective of this government loan is to help youth start their own business ventures.
- Women’s Pradhan Mantri Mudra Yojana (PMMY) Scheme: The government of India launched this credit scheme in 2015. This program allows women to apply for a loan in order to start their own businesses. This loan scheme is offered by a number of lenders and non-banking financial companies (NBFCs) in India. The repayment period for this loan could be as long as seven years.
5 Crucial Factors That Will Assist You In Obtaining An Unemployed Business Loan
It is difficult for unemployed people to obtain a business loan. In addition to the usual problems, job seekers must contend with all of the difficulties that come with being unemployed. There are a few things that candidates can do to improve their chances of getting a business loan, which is listed below:
- A CIBIL score of 750 or higher substantially aids in obtaining a business loan.
- Income Applicants can also seek jobs, as having a steady source of income helps in the acquisition of a business loan.
- Having collateral or security helps you avail of the loan. Secured business loans are easier to obtain than unsecured ones.
- Those who apply for a business loan with a co-borrower have a greater chance of getting the loan.
- Another option for obtaining a company loan is to apply for loans that are backed by the government or a third party.
Important Factors to Consider Before Applying for an Unemployed Business Loan
Here are a few things to bear in mind before applying for a personal unemployed business loan:
- The advertised interest rate may differ from the final rate offered, and the bank reserves the right to change it at any time.
- If you default on one of these loans, you could face steep penalties.
- Calculate the EMI using an online EMI calculator to find out how much you will have to pay each month.
- Make sure you have enough money to pay your bills on time.
Features of Business Loans for Unemployed Candidates
The features of unemployed business loans are given below:
- Rate of Interest: It differs from one application to another.
- The minimum amount is unlimited, and the highest amount is limited to Rs. 10 lakh (under Mudra Yojana).
- Tenure of Repayment: Up to 5 Years
- No collateral is required.
- No processing fee.
Eligibility Criteria for Unemployed Business Loan
In order to avail of a business loan while being an unemployed person, one must meet all the eligibility criteria that have been set by the bank officials. This unemployment loan eligibility criterion varies from bank to bank. However, there are a few eligibility criteria that are common across all the banks, and they are as follows:
- The candidate applying for the bank loan must be an Indian citizen.
- The age limit of the candidate applying for the bank loan must be 18 years and above.
- Excellent CIBIL score history
- Previously accumulated debts should be cleared.
- The small business idea for which the loan is available must be good with clear insights.
How to Apply for an Unemployed Business Loan?
There are several methods through which you can apply for an unemployed business loan. Some of the ways through which you can apply for an unemployed business loan are as follows:
- Through the bank’s official website
- A Physical Visit to the Bank
- Private Lender’s Website
- Physical Visit to the Private Lender’s Office
- Web or mobile applications developed by a third party
Steps to Avail a Business Loan for Unemployed People
The steps towards availing the business loan for unemployed people are as follows:
- 1st Step: Visit the lender’s official website or physical office.
- 2nd Step: Choose the loan type from the various options that are available.
- 3rd Step: Fill out the application form with all the necessary details.
- 4th Step: Submit all the necessary documents that are requested by bank officials.
- 5th Step: Post submission of your documents, the officials will evaluate your application and documents and process your loan.
- 6th Step: The loan money processed will be directly received by the borrower’s account.
Documents Required to Apply for an Unemployed Business Loan
The list of documents that one needs when applying for an unemployed business loan is as follows:
- Passport (Optional)
- PAN Card
- Aadhaar Card
- Voter’s ID Card
- Driving License (Optional)
- Credit card for photographs
- Photo ID Proof issued by the Central and State Governments
- Defence ID Card (Optional)
- Bank Account Statement
- A letter from a recognised public official
- Telephone Bill (not more than 3 months old for address proof-optional)
- Electricity Bill (not more than 3 months old for address proof-optional)
- Water Bill (not more than 3 months old for address proof-optional)
Unsecured Business Loan vs. Secured Business Loan
Secured unemployment loans are granted in exchange for security or collateral. In this type of loan, the borrower guarantees an asset to the lender, who then approves the loan. The loan amount is determined by the value of the pledged asset. When it comes to unsecured business loans, there are multiple lenders who do offer unemployed business loans without any collateral or security. However, if you chose the unsecured business loans, the interest rates would be higher than the minimal interest rates.
Applicants who are looking for employment may still be able to secure a business loan with low interest rates. This can be accomplished if the potential client has a solid business plan. They should, however, have a decent credit score and a good payback history, with no loan or credit card defaults if possible.
We hope that the detailed information on how to obtain a business loan while unemployed is useful to you. Should you have any queries related to business loans for unemployed graduates, then do post them in the comment section below and we will get back to you as soon as possible.
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