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What Makes Unsecured Business Loans Safe For Your Small Business?

Author: Andrew Edmonds
by Andrew Edmonds
Posted: Dec 26, 2016
Businesses have been getting small business loans from banks for a very long time. The bank gives your business a large sum of money. In return, you put up some assets to serve as collateral. That gives the bank a tangible form of security – if you default, they get your assets. So if secured business loans have served well for so long, what’s all the talk about unsecured business loans for small businesses? Are they even safe?Today, small business owners have more choices than ever when it comes to financing. But each business is unique. The funding alternative that’s right for your restaurant may not make sense for your doctor’s growing practice. However, an unsecured business loans offers potential benefits for a wide range of businesses. And an unsecured business loan can be used for many purposes. Perhaps it is a safe, smart choice for you.WHAT MAKES AN UNSECURED BUSINESS LOAN SAFE?No collateral requiredBy definition, an unsecured business loan does not require collateral. That’s a significant safety net for your small business. And for you as the owner. You don’t have to worry about losing vital business (or personal) assets if something goes wrong and you can’t repay the business loan. While that’s a benefit for you, it increases your lender’s risk. Without collateral, they will find another way to reduce their risk, such as charging higher interest rates.That being said, for many small businesses, eliminating the need for collateral opens doors. You may not even have any assets to secure business funding. So a traditional business loan is out of the question. An unsecured business loan is your only option. Fortunately, there are several different types of unsecured financing tools for businesses.Higher approval ratesBanks are notoriously stingy when it comes to small business lending. But your chances of approval are better if you seek an unsecured merchant loan. That’s "safe" because you’re more likely to get the money you need. With that money in hand, you will have enough cash to protect day-to-day business continuity. Or support near-term growth. Your business is safer because it’s stronger.Fast fundingObtaining an small unsecured business loans is faster because the lender doesn’t have to spend time appraising your collateral, filling out forms, waiting on documents from other sources, etc. The process is simpler and more streamlined.Speedy funding can make all the difference for small businesses. You rarely have the luxury of waiting weeks or months for a traditional loan to come through. Or not. Quick approval and funding can pull you out of a jam, whereas waiting could kill your business. It can also give you ready cash to take advantage of a timely opportunity. Just as with higher approval rates, the speed of an unsecured loan can strengthen your business.You can borrow moreMaybe. Some experts disagree about this. With any secured business loan, the amount you can borrow depends on the value of your collateral. And you cannot borrow 100% of that value. So you may be able to get a larger unsecured business loan, because you aren’t limited by asset value.Bad credit isn’t a deal-killerWhen your business and/or personal credit isn’t great, it’s easy to become discouraged. The right type of unsecured business loan can bring hope and renewed prosperity. And it can help you improve your credit score. At United Capital Source (UCS), we believe each business deserves every chance to succeed. And we can help. So let’s talk.Greater flexibilityTraditional business loans from banks and similar financial institutions come with fixed monthly payments. Even if you qualify, that repayment schedule might present a hardship for your small business. Alternatives such as an unsecured business loan can provide different repayment options. Here at UCS, we offer five payment choices:
  • Daily
  • Weekly
  • Bi-weekly
  • Monthly
  • A percentage of credit card transactions
These options allow you to match repayment amounts and timing with your expected cash flow. That can be very different from one business to another.With some unsecured funding solutions, there is nothing to repay. Accounts receivable financing is an example. You sell your outstanding invoices to a third party at a discount. They are repaid when they collect the full value of those invoices. Instead of charging interest, their profit comes from collecting more than they paid you for each receivable.Build a long-term relationship with your lenderSome types of unsecured financing for businesses make money available on an ongoing, revolving basis. Over time, the lender gains confidence in your consistent repayment track record. They may be willing to lend your business more money in the future. While good relationships are always important for business success, here at UCS we caution against zeroing in on a single lender.We have great working relationships with hundreds of diverse, top quality lenders. But we aren’t tied to any one of them. That way we can match your current funding need with the ideal source and type of small business loan. Sticking with a single company can hamper your ability to get the best deal next time around. That’s not safe because it puts your business future at risk.
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Author: Andrew Edmonds

Andrew Edmonds

Member since: Sep 07, 2016
Published articles: 35

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