Every business owner at one point of his/her life has to take help from small business loans. Provide collateral for a small business loan and secure yourself a secured business loan. A secured business loan is when a borrower has to offer a valuable asset to secure a loan. Usually, lenders define the kind of collateral they expect from the lenders. The payment terms are set by the borrowers, and they have the liberty to choose between monthly, weekly or daily payments.
In most of the cases, a lender might accept artifacts, antique jewelry, gold, diamond, massive house, cars, or any of your prized possessions. Offer the collateral as per lender’s requirement. Merchant Advisors offers custom-tailored, unique and capable funding and financing options to its customers. If you are agreeing to an unsecured business loan, basically you are agreeing that if you are unable to pay the loan, the lender is allowed to seize the equipment.
Secured business loans are the most compatible business loans and that’s the best active deal in the market. Most of the small business loans are secured in their nature. So, if you are running a successful business from home, but 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 equipment financing for it is a 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 turned out of a defaulter or conformists. As it is a risky business and the lender will never face the worse consequences. So, the next time you see ‘unsecured business loan; you must be able to detect the catch. Because collateral is always involved. In the case of an unsecured business, loan collateral exists as well, although the mention won’t be as clear as it should be.
All this takes won’t make any sense if you are unclear regarding the nature of the collateral. Anything that can be turned 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.
Potential Assets You Can Put Up As Collateral
Secured loans or loans that are secured by the collateral can be obtained on much lower interest rates. And if a lender makes an official claim to the collateral, it is called a lien. The kind of collateral to offer 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 shopping, 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 popular road taken by the business owners. If you fail to make the repayments on time, the lender will seize the involved assets –it is a crucial point to be noticed. 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. In the technical terms, it called as cash secured loans and passbook loans. Since failure to pay the debt will result in harsh consequences. So, in this case, the lender will take control of your bank accounts.
Lenders like to be on the safe side as well, they try their best to avoid financial loss, hence, they 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 cleat their payments, offer the invoice as collateral. Either you or the lender will follow up the customers in order to make sure that they will 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
Thinking about taking an adverse step, because you don’t have any valuable belongings such a car, house or a yacht to offer? A ray of hope still exists for you; you can secure a business loan by giving the personal guarantee.
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, in other words, giving you a chance to boost your business. Do you think the lender will suffer the loss? Under no circumstances, will the lender compensate for 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 credit 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 your assets until and unless the complete 100% of the loan amount has been recovered. To go full circle, the lender will have the liberty to seize your car, your 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 all of your valuables, and if you have high debt you will be left with nothing. 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 the case of the failure to make the repayment on time, the liability will be equally shared amongst the borrowers. As compared to an unlimited business loan, a limited business loan is a safer and less risky option.
Access Unsecured Business Loans
Have access to unsecured 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 2 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 you are approved for the loan and have signed the contract, the amount will be transferred into your bank account. Use the funds easily to cover your financial needs and grow your business as per your dream.
Types of unsecured 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, efficiently and smoothly.
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, 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, 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, thus, it offers home based business loans. You can access to funds up to $50,000 with fixed monthly payments. Provide collateral and run a successful from home.
Pros and Cons of Secured Business Loan
Nothing in this world comes for free; there is always a catch involved. 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 repayments 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 financing advice is on your side. Take advantage of business expansion initiatives and engage in rewarding marketing opportunities with our secured business loans.
The Last Drop Wisdom
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. Majority of the small business loan lenders ask for some kind of guarantee.
The only way you can keep your business running and get funds from the external party is to be the best business wo(man) you can!
Lastly and more importantly if you are making repayments on time then you are out of the woods. Unsecured business loans will act as the best financial fix for your business. Use the funds wisely!