Access to corporate finance can either make or also break a company, but it is critical to avoid making poor borrowing decisions that will set you back for many years. Your bank could be a source of funding.
Traditional financing, on the other hand, is best suited to firms who have a property to back up their loan and have been in operation for a long time. Of course, this means that many small firms and stores are unable to obtain regular bank financing.
However, there is one solution i.e. unsecured business loans, which are now available from an increasing number of lenders, which may be a better option. You may discuss with Capital Boost, who is one of the brokers for all kinds of business loans in Australia.
What are the advantages of unsecured loans?
- No collateral needed
Unsecured loans are a great way to get financing for small businesses because they don’t demand any security or collateral. The owner does not have to worry about surrendering his assets or even the business if the business fails to work out or has troubles.
- Quick and easy processing of applications
Applying for a loan can always be a very long and stressful process. Lenders want to know that you will be able to pay back your loan on schedule and in full. In addition, your collateral is going to be assessed to ascertain its genuine value. In the case of unsecured loans, there are no such issues.
- Minimal qualifying criteria
Although the requirements for any unsecured business loans will be less severe, you may need to demonstrate that you have got a consistent monthly revenue. You may be requested to provide a financial statement from the previous 6 to 12 months in order to do so.
In most cases, financial organisations expect you to repay the loan in predetermined monthly instalments over a set period of time. Because many lenders also provide various payment options, an unsecured loan may be your best option.
- You can build trust with timely paying back
If you can manage to pay back your unsecured loan as per the agreed terms and conditions, then you can build trust with the lenders. In the future, if you ever need to take an unsecured loan again then you will get more priority.
However, there are a few disadvantages of unsecured loans too.
- Higher interest rates
Although the higher interest rates associated with unsecured loans should be considered, remember that not seeking financing can also be costly.
- Smaller loan amounts
Lenders are usually hesitant to approve large loans for enterprises that have no assets to back them up. As a result, the level of risk they would be dealing with would go high.
- Strict eligibility requirements
Because your personal assets are not at risk, you will have to meet more stringent eligibility conditions during your loan application process.
If you are interested in getting small loans quickly to run your business, then better consider unsecured loans.