How to get a Business Loan without Collateral In India in 2025

Many business owners in India get confused when they hear the term “no collateral.” Most think it only refers to unsecured loans, but there’s another smarter option. Instead of going for high-risk borrowing, you can use your existing financial assets — like mutual funds, fixed deposits, or insurance policies — to get the money you need.

In 2025, this has become one of the easiest and safest ways for entrepreneurs to raise funds. You don’t have to sell your investments or put your property on the line — just use what you already have, while still keeping ownership of your assets.

Key Takeaways

• Business loans without property collateral can be obtained by pledging investments like mutual funds, FDs, or insurance.
• Loan Against Mutual Funds (LAMF) is one of the fastest-growing and cost-effective options.
• Businesses can unlock liquidity without selling or disturbing long-term wealth creation.
• Interest rates are often lower compared to unsecured options, making it efficient for working capital needs.

What does a business loan without collateral mean in India 2025?

When lenders say “business loan without collateral,” it doesn’t always mean no security at all. Instead, it usually means you don’t have to mortgage physical property, land, or gold.

Instead, financial investments can serve as collateral, such as:

• Mutual funds (equity or debt)
• Fixed deposits (FDs)
• Life insurance policies
• Bonds or debentures

This way, the loan is secured against financial assets you already own. For example, Loan Against Mutual Funds (LAMF) — offered by platforms like Quicklend — allows businesses to borrow against their portfolio while keeping investments intact.

Why should business owners consider pledging investments instead of property?

Pledging investments is increasingly seen as a smarter, faster, and less stressful option in 2025. Here’s why:

• Faster approval: Verification of digital investment holdings takes hours, unlike weeks for property valuation.
• Lower interest rates: Rates are generally 2 – 4% lower than unsecured loans.
• No disruption of wealth creation: Mutual funds and FDs continue to earn returns while pledged.
• Flexibility: Loans can be used for working capital, expansion, or paying vendors.

Who can qualify for a business loan without property collateral?

Eligibility is typically based on your investment portfolio and repayment track record. Common conditions include:

• Mutual fund investors: Equity and debt schemes often qualify.
• FD holders: Even short-tenure deposits are eligible.
• Insurance policyholders: Traditional plans with surrender value may be pledged.
• A stable repayment history and credit profile.

How do interest rates and loan-to-value ratios work in 2025?

Here’s how different options typically compare in India:

What are the main advantages and limitations of this type of loan?

Advantages:

• No need to mortgage property or gold.
• Lower interest costs compared to unsecured lending.
• Retain ownership and returns on pledged investments.
• Faster approvals through digital platforms.

Limitations:

• Borrowing depends strictly on investment value.
• NAV fluctuations (in case of mutual funds) may require extra top-up collateral.
• Limited to individuals or businesses with eligible investments.
• Some lenders may apply lien charges or processing fees.

How is demand for business loans backed by investments growing in India?

The appetite for such loans is rising as businesses seek smarter financing:

• Growing awareness: Borrowers increasingly prefer loans against securities, as they offer lower cost and faster access compared to traditional loans
• NBFC sector expansion: NBFCs — key providers of loans against securities — continue to grow strongly, driven by financial inclusion and structured products.
• Regulatory support: RBI data shows secured and asset-backed lending is expanding steadily, even as growth in purely unsecured segments moderates.

These shifts point to rising confidence in loans backed by investments, with products like LAMF gaining ground among entrepreneurs and SMEs.

Conclusion

In 2025, the idea of a “business loan without collateral” is getting a fresh meaning. For Indian entrepreneurs, it no longer just means unsecured loans — it’s about using financial assets like mutual funds, FDs, or insurance policies instead of gold or property. The big advantage? Lower interest rates, quicker approvals, and the chance to keep your investments growing at the same time.

With solutions like Quicklend’s Loan Against Mutual Funds (LAMF), SMEs can access funds in a transparent, flexible, and fully digital way — unlocking liquidity today while protecting their long-term wealth.