Every business owner, at one point of his/her life, has to take help from a small business loan. Provide collateral for a small business loan and secure yourself a secured business loan. The lenders define the kind of collateral they expect from the borrowers. The borrowers set the payment terms, and they have the liberty to choose between monthly, weekly, or daily payments.
A lender might accept artifacts - antique jewelry, gold, diamond, massive house, cars, or any of your prized possessions; you must offer the collateral as per lender’s requirement. Merchant Advisors offers custom-tailored funding & financing options to its customers. When a borrower applies for a secured business loan, he/she agrees to make the payment on time, and failure to do so will result in lenders seizing borrower's equipment.
Secured business loans are the most compatible business loans in the market. Most of the small business loans are secure in nature. So, if you are running a successful business from home and need an external source of funds, you must apply for a Home Based Business Loan. Moreover, if your restaurant or construction company needs the addition of equipment, go with the equipment financing. Both of these loans are types of Secured Business Loan.
Lenders won’t hurt their repute to lend you a loan. Mostly, the application gets rejected because the lender sees something shady in the application. Lenders are operating on 50/50 chance of the borrower turns out to be a defaulter or conformist. As it is a risky business and the lender will never face the worst consequences. So, the next time you see the unsecured business loan; you must be able to detect the catch because collateral is always involved.
Get in contact with the potential lender to know the eligibility criteria. Anything that can turn into paper – cash, is called as collateral. Putting down collateral means less risk for the lender, so evaluate the risk before selecting the business loan.
What assets can a borrower offer to the lender as collateral?
The alternative lenders offer Secured loans (collateralized loans) on lower interest rates, and if a lender makes an official claim to the collateral, it is called a lien. The kind of collateral varies according to the nature of the business loan. Want to lend some cash to purchase a car? The said car would act as collateral. In the case of a loan for house, the house would act as collateral.
We have compiled a list of assets that can act as collateral, skim through it to get a better hold:
Putting up homes and real estate properties as collateral is the most common road taken by the business owners. If the borrower fails to make the repayments on time, the lender will seize the assets. Sometimes, no matter who hard one tries, things collapse. The goal is to prepare for the worst, so if you fail to make the repayments on time are you ready to lose your house?
Other than sacrificing your house or real estate you can offer your cars, boats or any worthy equipment. Acknowledge all the factors before taking a huge risk.
If putting up your house or a car as collateral doesn’t settle well for you, we have another option for you. Cash resting in your bank account can act as collateral as well, and the lending company calls it cash secured loans and passbook loans. Since failure to pay the debt will result in harsh consequences, and the lender will take control over your assets.
Lenders like to be on the safe side; they try their best to avoid financial loss and prefer secured loans. Before putting up your life savings as collateral, ask yourself a question: Is it worth the risk?
Unpaid or outstanding invoices can be troublesome; they disrupt the cash flow. So, if your customers are reluctant to clear their payments, offer the unpaid invoices as collateral. Either you or the lender will follow up the customers in order to make sure they pay.
If your business needs a piece of updated equipment, apply for equipment financing and then that leased equipment can act as collateral. This financing option saves you from selling your valuables.
Secure a loan with a Personal Guarantee
Are you thinking about taking an adverse step because you don’t have any valuable belongings such as a car, house, or a yacht to offer to the lender?
In case of any discrepancy and failure to pay the debt, the borrower is personally responsible for the damage. Agreeing upon a personal guarantee means giving the lender the autonomy to see whatever and whichever asset he sees appropriate.
The lender is offering you the money and giving you a chance to boost your business. Do you think the lender will suffer the loss? A thin line difference between the two exists, the lender can only seize the asset mentioned by the borrower in the case of a collateral guarantee. And in the case of the personal guarantee, the lender has the right to seize any of your assets.
Now that you have agreed to offer a personal guarantee. The next step is to choose from the two types: Unlimited Personal Guarantee and Limited Personal Guarantee.
Securing a business loan with an unlimited personal guarantee means the lender will have control over borrower's assets until and unless the borrower makes the repayment on time. The lender has the liberty to seize borrower's car, house, or any valuable. This funding option is full of risks; let’s assume the borrower fails to make the repayment on time, and now the lender is asking for the money. The lender will have control over borrower's valuables, and it will be difficult for him/her to pay the pending debt. So, before you decide to go with Unlimited Personal Guarantee, it is recommended to analyze and evaluate your every step.
A limited Personal Guarantee is only a good option when you are not the only one running the empire. If you have partners and all you have decided to apply for a secured business loan. In case, the borrower fails to make the repayment on time; all the business partners will share the consequences equally. As compared to an unlimited business loan, a limited business loan is a safer and less risky option.
Access Secured Business Loans
Have access to secured business loans in three simple steps:
Tell us about your time in business, annual revenue, business plan, and fill out our online application in a couple of minutes. We use an eclectic approach; we will look at all the contributing factors other than a credit score.
If we like your application, you will hear from us in less than two business days. As we offer flexible payment terms, you have the liberty to select the amount of payment. Read the contract carefully before signing the dotted line.
Once the lender approves the loan, you sign the contract, and the amount is in your bank account. Use the funds to cover your financial needs and grow your business as per your dream.
Types of a secured business loan
The ultimate goal of an alternative lender is to provide financial assistance to its customers. As previously explored, you will have access to funds to lease equipment or a decent opportunity to streamline the cash flow for any home-based business loans.
We have mentioned prominent features of some secured business loan:
When it comes to giving a makeover to your office or a technology upgrade is underway, there is no better funding option than an equipment financing. That fresh piece of equipment will act as collateral, so keep on running your business effectively and smoothly.
A Merchant Cash Advance is one of the most expensive funding options. It provides you enough money to cover the day-to-day operations and surprise expenses. If you carry out enough transactions via a credit card, the MCA will be feasible for you. Depending on your sales, the lender will take the chunk out of your credit card sales. If you prefer to pay on flexible terms, the MCA is an ideal financial answer to your money related problems.
Running a small business in this market is no walk in the park; one needs external help on multiple occasions. Merchant Advisors comprehends the stringent process, and it offers home-based business loans. You can access funds up to $50,000 with fixed monthly payments. Provide collateral and run a successful business from home.
Pros and Cons of Secured Business Loans
Nothing in this world comes for free; there is always a catch involved. A Secured Business Loan is worth having a glimpse at for its pros outweighs the cons.
1. The loan is accessible at a very reasonable rate.
2. Since you are providing the collateral, the lender pays limited attention to other financially contributing factors.
3. Flexible repayment terms give the borrower more control.
1. Failure to make the repayment on time may result in irreparable loss.
2. The interest rate will be varying continuously, depending on the current trend and the nature of your loan.
Why choose Merchant Advisors’ for Secured Business Loans?
Secured business loans from Merchant Advisors offer small businesses the flexibility to use the loan for many loan purposes, including property financing, fixed asset procurement, or for general purposes like working capital. Merchant Advisors strives to provide the best financial support by identifying your business’ unique history, present financial position, and future working capital needs. Merchant Advisors’ 95% approval rates, zero upfront fees, and more than 20 years of experience providing quality, specialized financial advice is on your side. Take advantage of business expansion initiatives and engage in rewarding marketing opportunities with our secured business loans.
From all the information that we have shared, it is evident that no such thing exists as ‘a free of collateral’ loan. So whenever you hear a lender talking about an unsecured business loan, distance yourself. The majority of small business loan lenders needs a guarantee.
The only way you can keep your business running and get funds from the external party is to be the best businessman or woman you can!
Lastly and more importantly, if you are making repayments on time, then you are out of the woods. A secured business loan will act as the best financial fix for your business. Use the funds wisely!