Unsecured Business Loans
A business may require a loan for a number of reasons. Whether you’re looking to expand your business or purchase additional inventory and equipment, quick access to a business loan can help stimulate business growth and keep a company thriving.
Unsecured Business Loans
Working Capital Loans
Working capital is critical to the growth and success of any business. Managing finances is a constant battle in the business world. As a business grows, it is necessary that the cash flow expands with it in order to succeed.
If you manage products and maintain a large inventory, having cash at hand is a must. Meeting the demand of your customers is vital to your profitability and business reputation.
Financial growth and internal business expansion go hand and hand. The big question facing any business is how to grow in a way that is both manageable and cost effective.
Equipment and machinery are important assets to any business. Many products can’t be produced without the proper working tools. An equipment loan can be used to purchase new or used equipment.
What is an Unsecured Loan?
An unsecured loan, sometimes referred to as a signature loan or a merchant loan, is a special type of financing available to business that is different from traditional lending. Instead of requiring collateral to obtain financing, unsecured lending uses several other factors to judge the eligibility of a loan applicant. These could include things such as your credit score and sales records from the business. This type of financing may be advisable for small business owners who do not want to risk their personal collateral in order to obtain the financing they need. Since the loan requirements differ from traditional bank loans, the interest rates and speed of approval can be much different. Oftentimes these merchant loans are reviewed and approved in a very short time frame, making them ideal for anyone who is in need of immediate capital.
Secured Vs. Unsecured Loans
The main difference between an unsecured and a secured loan is the collateral required. There are pros and cons to all lending options that business owners should consider in order to come to an informed financial decision for their business.
Secured Loans often come from banks or traditional lending sources. They are the most common type of financial borrowing available. Secured loans, backed by an asset such as a house or piece of property, give the lender the ability to repossess collateral should the borrower default on their loan. The type of collateral required can vary and the lender and borrower must come to agreeable terms in order to move forward with the lending process.
Loan processes vary between different secured lending services. The standard procedure usually involves the loan amount, asset negotiation and loan repayment terms. Repayment terms are often much more generous in both time and interest rate because the loan is backed by collateral in the event of default. Secured loans, backed by an asset such as a house or piece of property, give the lender the ability to repossess collateral should the borrower default on their loan.
Unsecured loans differ drastically from secured loans, including the application requirements. Merchant business lending is not centered on collateral or personal assets, and instead focuses on other factors of your business to determine loan worthiness. Some factors that can help with acquiring an unsecured loan might include your credit history, sales records, business growth, and projected financial income.
Unsecured business loans can come in the form of credit cards, personal loans, corporate bonds, and payday loans. Interest rates tend to be higher and come with a shorter repayment period, which results in a lower amount paid towards interest. There is no collateral required for this loan agreement.
SnapCap prides itself on our ability to listen and understand your unique business needs. SnapCap is an open and honest source for businesses to apply and receive the most competitive short-term loan options available online today.