Advantages of unsecured small business loans

Before we talk about the advantages of an unsecured small business loan, let's take a look at what exactly an unsecured small business loan is. An unsecured small business loan is a loan given to a small business that has no collateral. Some loans have to be backed by something, for example, your house, your equipment, or your other assets, an unsecured loan is just that, unsecured.

So, why would you want an unsecured business loan? For a business owner having the money to fund their business, whether that is to buy equipment, fund projects, fund payroll, maintain operations, or whatever other costs you have from running a small business, is essential. So, let's face it, the advantage of an unsecured small business loan is that it lets you borrow money for your business without having to use your business or personal assets, and all businesses need money to grow.

A small business regularly suffers from lack of funding. It is this lack of funding that will stop your business from moving to the next level, applying for an unsecured small business loan will solve this problem.

An unsecured small business loan is offered without any strings attached and you are free to use the money in whatever way you need. If you get a line of credit you will not have to explain how you use the money to the bank. However, if you use a loan, you may have to offer explanation of why you want the money, and your intent for using it. Once funded, you can use unsecured money without having to ask permission. Because of the flexibility of an unsecured small business loan many businesses are using them for start up, debt settlement, purchase of materials, and business expansion, not to mention a million other uses.

Generally for a small business an unsecured loan is approved faster than other types of loans, thereby giving you your money promptly so you can begin to grow your business. You can apply and be funded in a week. Of course, this will vary from company to company, and will depend on some of your stats.

There are some beliefs that an unsecured loan means higher interest rates, and lower amounts since you are not backing it up with anything. The fact is, if your credit is bad, this will be true. However, if you have good credit, Many unsecured small business loans may have lower interest rates than collateralized loans, which could be good news for the small business owner.

In order to even be considered for an unsecured loan you have to have a decent credit score, you have to have been in business for enough time to evaluate how successful you are, and you have to make at least $100,000 a year as a business or you won't be considered.

Let's recap: The pros or advantages include that an unsecured small business loan provides your company with growing capital that has flexibility. Also, because you do not have to back the loan by anything, you can often apply for an unsecured business loan in a matter of minutes, and have it approved in as little as two to three days. Of course, having a good credit score will go a long way in obtaining a better loan rate.

The disadvantages are that you may not get as big of a loan, or as good of a rate. You have to have been in business for a while, and you have to make a minimum amount. But those really are the only disadvantages of an unsecured business loan.