Home  »  Careers • News Stories   »   What Are Unsecured Business Loans and How Can They Help Your Business Thrive?

What Are Unsecured Business Loans and How Can They Help Your Business Thrive?

A business loan is a common way to get the capital you need to grow. But what if you don't have collateral or other assets that can be used as security?

An unsecured business loan is an alternative option for those with good credit but needs savings or property they can use as collateral.

One can get a business loan if they have a credit score of 640-700.

If you are on a lower scale, your business credentials must be strong to get the loan. However, it still does not ensure you a secured loan.

According to Unsecured Funding Source, it can be challenging to get funding despite a good credit score because it might require you to give some assets as collateral.

But that's not the case with unsecured business loans.

You can also refer to an unsecured business loan as a signature loan since it is based entirely on your credit history and ability to repay it.

These loans are popular among small business owners because they're quickly approved and often have lower interest rates than secured loans.

Advantages of Unsecured Business Loans

Unsecured business loans have many advantages over other types of financing. Some of the most notable are:

Flexibility and Convenience of the Application Process

The application process for unsecured business loans is fast and convenient.

There are no credit checks; you don't have to provide collateral or wait for approval.

You also have the option of applying online or over the phone, which saves time and makes it easier than ever before to apply for a loan that fits your needs.

Speedy Approval and Funding

A typical loan approval process takes one to two days, but some lenders can fund your application within 24 hours.

This means that you could have access to the funds you need before your next day at work even begins.

Unsecured business loans are also easy to apply online without going through any paperwork or faxing documents back and forth.

You complete a secure application form online, submit it, and await confirmation that the lender has accepted it.

Lower Risk for Business Owners

Unsecured business loans are an excellent option for businesses that don't have collateral to offer as security but still need a little extra cash to help them grow.

When you apply for an unsecured business loan, you're not required to put up any real estate or other assets in exchange for the money you receive from your lender.

That means there's no risk of losing your home if things don't go as planned and you can't repay your loan on time.

The lower risk associated with this type of financing makes it ideal for entrepreneurs who want access to capital without having their finances tied up in the process, and that's why we recommend using them.

How Unsecured Business Loans Support Business Growth

Unsecured business loans are a great way to support your business growth. If you need capital for expansion or are looking for an influx of cash to pay off debt and free up more resources for investments in the future, unsecured business loans can help.

Unsecured business loans also provide access to capital that may otherwise be unavailable if your company lacks collateral for a traditional loan.

This makes them ideal for those who want or need additional funds without having the security of real estate or other property as collateral backing up their request.

It's one reason small businesses often choose this financing over others, like SBA loans or equipment financing options offered by large banks and credit unions.

SBA can provide you with a good amount of money.

Data shows you can get a maximum of  $5 million as an SBA loan in the US. However, the lender will require some guarantee for the same. 

Considerations and Tips for Obtaining Unsecured Business Loans

When you're looking for an unsecured business loan, there are a few things to consider:

• The amount of money you need. If your business is growing and requires a large infusion of capital to expand its operations, then an unsecured loan may be the right choice for your company. Secured loans might be better suited if it's just starting as a small operation or has little cash flow since they require collateral such as property or vehicles rather than just promising future payment. 
• The interest rate on offer. Interest rates vary widely among lenders. Do some research beforehand so that when comparing rates between different lenders, they're apples-to-apples comparisons based on similar terms, such as repayment periods and fees/charges associated with each loan type offered by those companies.

Alternative Financing Options for Business Growth

If you're looking for alternative financing options, the following are some of the most common:

• Business credit cards. These can be used to purchase supplies and equipment and pay employees. Business credit cards also allow merchants to accept payments from customers without having to set up their own merchant accounts or payment processing systems. However, they come with high-interest rates, and if you need to be careful with how much money you spend using them, it could cost more than just paying cash would have in the first place. In 2020, 21% of businesses got funding through business credit cards.
• Business loans and lines of credit (LOC). A business loan is a long-term investment made by an outside party, such as a bank or other financial institution, giving your company capital to grow into something bigger and better. LOCs are similar, except their short-term loans are explicitly meant for projects like purchasing new inventory or renovating an office space.

Conclusion

In conclusion, unsecured business loans are an excellent way to support the growth of your business. They offer flexibility and convenience in their application process and rapid approval and funding.

The low risk for borrowers makes these loans particularly appealing for entrepreneurs looking for alternative financing options that don't require collateral or equity investment.