Unsecured Loans For Your Business
Many startup companies and established organizations rely on unsecured business loans as a source of funding.
To fully understand this type of loan, it must be broken down into two sections:
Unsecured. In short, this means that you do not have to put up any collateral in order to qualify for the loan.
Business loan. As the name implies, the loan must be used for business purposes.
The ability to apply for an unsecured business loan without collateral is a big benefit. Some organizations do not have any collateral, making it impossible to move forward with a secured loan. Additionally, there are organizations that are not interested in using collateral, such as real estate, to secure a loan.
What can an Unsecured Loan be used for?
An unsecured loan can be used for almost any expense surrounding your business. Some of the most common include: purchase of equipment, office expansion, remodeling, advertising, or marketing. Of course, you can use the money however you see fit. Visit this page for more info about equipment loans.
Since unsecured business loans do not require collateral, banks will take a very close look at your application. They are interested in seeing a high credit score, a perfect credit history, and income that proves you can repay the loan based on the specified terms. If you opt for an unsecured business loan and neglect to pay back the loan, the bank is out – there is no collateral to make up the difference
Business & Personal Credit Matter
If possible, establish your business credit score before applying for an unsecured loan. This will greatly increase your chance of being approved for a loan that suits your every want and need.
Not sure what your current credit score is? Click here and find out first.
To hedge against the risk of unsecured business loans, banks will charge a higher rate of interest. Are you willing to pay more in interest to obtain an unsecured loan?
There are many banks and financial institutions throughout the country that offer unsecured business loans.
To ensure success, ask each one these questions:
- What is your process for applying for an unsecured business loan?
- What are the eligibility requirements when applying for a commercial loan?
- What types of terms, interest rates, and overall loan amounts can you offer somebody in my position?
By asking these questions it is easier to compare banks and the loans that they are offering.
An unsecured business loan can be an excellent source of financing the growth of your business. By comparing the pros and cons of this loan type to others, you can make an informed decision on which type of financing is best for your organization.