First Things First: What is an Unsecured Business Loan?
An unsecured business (or small business loan) is a type of loan for small businesses in need of working capital. An unsecured business loan does not require any type of collateral. Instead of collateral, a financing company looks into how much money your business makes in sales and the types of customers you deal with. This way, your business can get the money it needs without ever having to worry about putting personal items up to receive the loan.
Unsecured business loans are also a lot more customizable than a loan you would get from the bank. Terms can vary, and the process to receive the loan is a lot faster.
Another thing to know about small business loans is that there are endless possibilities of what a company can receive. The more sales your business does, the more money you can get. The better the history of your clients, the more money you can get. The possibilities are endless. It all just depends on how your company works.
Another perk is that there is far less paperwork to be done with an unsecured business loan. Since your business does not have to put up collateral to get paid, there is nothing to appraise. Therefore, your will receive your loan much faster than you would through a bank.
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Why Businesses Use Start Up Business Loans
Small businesses use the help of unsecured business loans to get the money they need to fund any type of business expense. Even if your business is going steady, an unsecured business loan can be used as a safety net in-case anything should happen that requires a large sum of money to repair. If your company is B2C, you may not be able to keep up with inventory bills and payroll. Your business will can get the funds it needs cover all the necessary needs of running a business. The best part, you won’t have to wait around or jump through hoops how you would with a bank.
Many businesses that need unsecured business financing are business-to-consumer businesses, or businesses that need the funds but don’t have the adequate sales for other funding options such as invoice factoring. Unsecured financing can also offer your business larger loan amounts for that hefty bill you need to pay. Since unsecured business loans do not require you to put up assets to secure the loan, the limits are much higher.
Depending on how fast you can get the paperwork back to the funding company, you can get your loan in less than 72 hours. It is important to build a relationship with the funder so that you will be able to get future loans even easier. If you form a good relationship with a funding company, they will be more inclined to provide your business loans at a faster rate. It is important to have a good credit report as well.
Understanding Working Capital Loans
Like any type of financial program, there are risks to be had. It is important to understand how to approach unsecured loans as they are different from regular loans. Since working capital loans are more of a risk for lenders, there may be higher interest charges than a regular loan. This is because lenders are taking on your business with no collateral, therefore, running a bigger risk for themselves if their clients don’t pay. This is something that should be accounted for when considering an unsecured business loan. If your business has a higher credit rating, you’re in luck. You will not likely be charged a higher rate than what a bank would give you. It is a good idea to make sure you have a financial plan before your business agrees to unsecured loan terms so that you will not run into late payments.
Get Your Unsecured Small Business Loan in a Few Days
We can get your business set up with a working capital loan company in just a few short minutes. You tell us what you are looking for, what type of business you have, and we will be able to get your business the loan it needs to grow.
We have a networking of financing companies with various rates and terms for whatever you need. Running your business isn’t always easy. That’s why we want to help your business succeed and take off a little of the work for you. We evaluate your business and needs and match you with the best funder.