We know that unsecured business loans are comparatively faster to get instead of secured loans. But given the 2 options, how do you know which one is the right one for you? Since the economic recession and the monetary crunch, small and less-established businesses have off late found it tough to get a loan from the big banks. And those who are fortunate enough to grab a business loan usually get a secured loan. As banks wish to offset any kind of default or delinquency, they stay safe by offering secured loans which have attached collateral.
However, if you don’t have enough valuable asset or property or collateral to seek a secured business loan, how about getting unsecured loans for businesses? Read on the concerns of this post to know how such loans can help your business grow.
You can obtain higher loan amounts through unsecured financing
Yes, if you’re hunting for business loan options where you can get a lump sum amount, unsecured business funding is the best way out. Secured business financing is usually limited to a certain percentage of the asset value of the collateral and this is not the case with unsecured loans. You don’t take much time to get unsecured loans and the application process lets you skip the appraisal step which is generally common with secured business funding. There’s less paperwork, documentation associated with unsecured business loan lending.
The business receives additional flexibility through unsecured lines of credit
Could you think of having added cash in your hand when you need it, more so when the cash isn’t leveraged against your business assets? As long as unsecured business funding is concerned, it offers flexibility and adaptability for a growing business. You may use the extra loan proceeds to cover payroll expenses or buy the new server which you need or even pay off your accounts receivables. Since there is no bar to the way you can use the proceeds, it offers enough flexibility to a business that takes out unsecured business lines of credit.
Unsecured business loans improve your relationship with the lender
All businesses love to get a lender by their side as that will ensure obtaining a loan whenever the entrepreneur needs. When you run your own business, it is vital for you to maintain an amicable relationship with your lender so that you may receive all sorts of help from him. There are times when your unsecured loan request is granted by the banks just because you have a strong business credit history and because you have a good enough reputation. If you have been working hard to earn a good reputation, you can definitely make a good impression on the lender regarding your unsecured debt.
Therefore, whenever you think you are in need of business funds, you can certainly opt for unsecured business lines of credit. However, make sure you repay the loans on time so as to avoid hurting your credit history.