Almost all of the business loans require collateral to cover up the default, but lenders have designed unsecured business loans for entrepreneurs who don’t have any valuable possessions to offer yet. In the case of unsecured business loans, the lenders don’t ask you to provide equipment, but one way or another they will cover their expenses from your assets. They will hold you accountable for the main risk that they are taking.
Now that collateral is out of the picture; the lender will take a refined look at your credentials – credit score, annual revenue, cash flow, business plan, and multiple other metrics. The point being, if you don’t have any assets to offer as collateral, makes sure you are excelling in the other domains.
We are determined to help small business owners so that they can reach their maximum potential. If you have bad credit, we offer bad credit business loan. And if you don’t have the collateral to offer, we have designed Unsecured Business Loans to keep financial troubles away from you. We offer a variety of unsecured personal loans, including auto loans, student loans, credit card loans, and signature loans. Analyze the loan range, approval time, and repayment term so you can select the most affordable one for your small business.
With an unsecured business loan, one can have cash up to $500,000.
Loan approval takes a day, and one can access funds in 4-5 business days.
A business owner has to face many financial hardships; to provide some comfort Merchant Advisors offers flexible payment terms.
The positives and negatives of Unsecured Loans vary from business to business. If you find a couple of merits in regards to your business needs, benefit from these loans. Let’s have a closer look:
Pros of Unsecured
To help you make a well-informed final decision, we have jotted down some advantages of using an unsecured business loan as an ideal solution.
Lenders don’t ask for much when applying for an unsecured business loan; the list of the required documents is limited. As a result, lenders don’t microscopically scan your documents and don’t take much time in sharing the final verdict.
Save your assets
As we have established so far, unsecured business loans don’t ask for any collateral. So it saves your house, car, or any prized possessions. The worst-case scenario, you fail to make repayments on time and end up losing your assets, but this won’t happen here. The interest rate and cost of the unsecured business loan are slightly higher than the other business loans – a noteworthy point.
Liberty to use the funds!
Unsecured business loans don’t come with a strict rule book. The lender gives you complete autonomy to use the funds as you please; you can invest the money wherever you want.
Cons of Unsecured
Unsecured business loans have a lot of advantages, but nothing comes without a cost. There are a couple of disadvantages of unsecured business loans. Go through the negatives before making the final decision.
Flexible repayment schedule!
One of the drawbacks of short-term business loan is its frequent repayments. One has to make weekly payments depending on the schedule and the loan amount.
Varying interest rates!
The other shortcoming of the unsecured business loan is its high rates. As the lender is not asking for collateral, the interest rate is higher than other funding options. The accelerated rate saves the lender from the damage caused by defaulters.
if not collateral!
Regardless of the kind of loan, some guarantee is still required. Here, in unsecured business loans lenders ask for a personal guarantee. In the case of any discrepancy, the borrower would be responsible, personally.
To secure an unsecured business loan, you are required to meet the following eligibility criteria:
1. You must be running a business for at least a year.
2. Your business must be generating an annual revenue of at least $50,000.
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 12 hours. We will assign a dedicated financial advisor to you. We offer flexible payment terms, so, 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.
Not all business owners have adequate funds to provide collateral; many alternative lenders offer an unsecured loan. We have compiled a list of Business loans:
Revolving credit is the best offer a borrower can get without providing collateral. When the lender approves a loan amount, the money gets transferred into the borrower's bank account. Take as much money as needed, keeping the limit in mind. The borrower is obligated to make the weekly or monthly payments as per schedule. Once the borrower makes the payment, account recharges. So, if you are uncertain of your financial needs and are usually facing unexpected financial crux, then, business lines of credit will work for you.
Unpaid invoices from customer’s behalf can be a hindrance in a potentially significant investment. With the invoice financing, the borrower doesn’t need to worry about providing any collateral, and he or she can easily convert the unpaid invoices into cash.
If a business has current credit card sales, then, a Merchant Cash Advance (MCA) might be a model funding option. Here, the lender will gulp a chunk of agreed money from the credit card sales. MCA is among the fast funding loan options. With a limited hassle, you get approved for the MCA in a couple of days.
One can cover daily operation expenses by using the Working Capital Loan. For small business owners, this funding option will provide necessary help to meet the mundane purchases.
Change is a prerequisite for the success of any business, and to keep on moving forward, a business owner needs to keep on updating equipment and adding new perspectives to business in the form of new employees. The novel input is required to keep on launching new advertising campaigns to stay relevant. Commercial loans will help you achieve that goal.
When business owners apply for an unsecured business loan, they assume they don’t have to offer collateral. We care about our clients so we will debunk the myths one by one.
Most of the small business owners deduce since they are not offering any collateral they don’t have any obligation to pay back the loan. If you do fail to make any repayments, the lenders will cover their loss by tackling one of your assets as they see fit. In case of any discrepancy inform your lender beforehand.
The only way out of your potential lender’s grasp is to make the payments on time. As you have allocated a single asset for collateralization in a secured business loan so if you turn out to be a defaulter, the lender will seize that asset only. But since unsecured business loan means no collateral, the lenders will seize the asset of their own choice. In case of any default, the borrower is deemed to face the consequences.
Usually, unsecured business loan means the lender needs an undefined piece of collateral from the borrower. It means your potential lender is giving you an option to provide collateral in any form you please. If you don’t have a car or a fancy big house to offer, then this is remarkable news for you. It gives you a chance to control the deal; you can offer a piece that you think is easily accessible for you.
Now that you are here, it is evident that you don’t want to offer collateral to the traditional banks, credit unions or alternative lenders. We are here to guide you regarding the business loan that doesn’t ask for a collateral, formally. To save yourself from payment penalties, here are a couple of precautionary steps that you must exercise.
For starters, you should conduct thorough and detail-oriented research. Have a clear objective of your business.
Then, you should inspect your financial standing – credit score, credit score report, documented credit history, business tax returns, and bank statements. A stellar financial standing means more chances of loan approval and vice versa. So, make sure everything is impeccable. When filling out an application, you should enter numbers, attentively.
Lastly and more importantly, you must read the contract with open mind and eyes. If there are any probing factors, clear them out by asking your lender again and again.
Now that we have explored the primary difference between a secured and unsecured business loan and refuted the popular notions about them, you can see if an unsecured business loan is a perfect pick for your business.
As we care about the well-being of our customers and the success of their businesses, we highly recommend exercising caution.
If the whole process is still unclear, talk to our financial advisor. Our financial advisor will guide you through the whole process, making loans accessible to you.Apply right away