With many benefits, more and more people are turning to unsecured commercial loans. Before we go any further, it is important to note that commercial loans are for business use. In other words, this type of loan is granted for business use – not personal use.
Determine if Commercial Loans are Right for you
There are many factors to consider as you determine if an unsecured commercial loan is right for your organization at the present time.
The number one benefit in the mind of many borrowers is this: no collateral is required. This means that you don’t have to put up anything of value, such as real estate, in order to secure the loan. In turn, you take a lot of the risk out of the equation.
Not all unsecured commercial loans are created equal. Every bank has its own lending terms and conditions. Along with this, you have to make a decision that is going to benefit your company right now as well as in the long run.
With an unsecured commercial loan, you should expect to pay a higher rate of interest. Since no collateral is required, the bank must charge a higher interest rate as a way of protecting itself against default.
Three points to take note of as you search for the right unsecured commercial loan:
- Interest rate. As noted above, your rate is going to be higher than it would with a secured loan. However, it is important to know exactly how much interest you are paying.
- The term. How long do you have to pay back the loan? The longer the term the lower your monthly payment.
- Fees. Are there any fees associated with your unsecured commercial loan? In some cases, the answer is yes. You need to get an itemized list of these fees as well as an explanation for each one. Not all loans charge the same fees, so make sure you compare several lenders.
Businesses in need of capital, regardless of the reason, should consider unsecured commercial loans. This money can be used for expenses ranging from buying real estate to expansion to marketing.
Although most unsecured commercial loans are short term, this gives you access to the money needed to expand your business.
Chris Fuller went to the University of South Florida and has worked in the financial sector for over 20 years. He has extensive experience in all aspects of personal and small business lending, from personal loans, equipment finance to cash flow based solutions for small mom and pop businesses, and large corporations.