Benefits to an Unsecured Credit Loan for Small Business
There are several benefits to getting an unsecured credit loan for your small business over a secured loan. An unsecured credit loan does not require collateral like a secured loan does. It is almost all based on the credit history and credit worthiness of the business or the applicant.
As mentioned right above, one of the best advantages of an unsecured loan is that you will not have to put up any collateral. If you do not have collateral this may be the only types of loan that you will be able to get. You should remember, however, that since you are not giving collateral, you will probably have interest rates that are a bit higher than a secured loan’s rates would be.
An unsecured credit loan typically will fall into the $10,000 – $100,000 range. This can be the perfect amount range for most business owners. As you are looking for banks and private lenders to get a loan from, keep in mind that you should not have to put money out up front, like for an application fee. Though you may have to pay one, a reputable lender will not make you pay it up front, it is more likely that they will add it to the loan itself.
Another well known and well liked benefit of getting an unsecured credit loan is that the process is much simpler and easier than applying for a secure loan. Usually all you need to do is have your credit score pulled then sign off on the terms of the loan. It is very possible that this is something that can be done in hours or a day or two, it will not take many days or weeks like a secure loan will. You will usually be able to get a wire transfer or check very quickly so you can get started on the plans you have for the money.
There are some disadvantages to getting an unsecured credit loan that you should keep in the back of your mind. One of these is that unless you have excellent credit, you may not be able to get one. Even if you have good credit, you can expect to pay a higher interest rate since the bank or lender will be taking a bigger risk without requiring collateral. Though it was mentioned above that getting an unsecured credit loan can be a very quick process, if your credit is below their normal standards, they may want to go through your financial statements. This can take awhile and though possible to get, if they are going through the process, you may want to try to find an alternate source for money.
If you are not able to get an unsecured loan, you will need to look into some other options. You may need to go with the secure loan route and offer up some collateral or you may have someone, like a friend or family member who is willing to loan money for your business. There are other options out there, they just may not have the benefits of an unsecured loan.