Challenges are a daily occurrence in the world of business. More often than not, business owners mistakenly view these challenges as an obstacle rather than an opportunity. Obtaining business finance is one of the most effective ways to overcome financial distress, increase output, or expand operations. Instead of accumulating excessive business credit card debt, you can get access to funding using a range of affordable alternative methods.
An unsecured loan is a fast and effective way to get business finance. Before detailing some of the most common reasons to consider an unsecured loan, we will first look at some basic facts, features, and frequently asked questions.
An unsecured loan allows you to obtain finance for your business without providing an asset as collateral. Unsecured business loans are not guaranteed and are generally short-term in nature. Instead of using collateral to assess a business loan application, lenders take into account other factors such as business cash flow and creditworthiness including credit score.
The main difference between the two is that a secured loan involves the use some form of collateral to obtain finance. Real estate is the most common asset utilised with equipment, motor vehicles, and accounts receivable among other options. Caveat loans and second mortgages are examples of secured loans. In contrast, an unsecured loan does not require the use of physical assets as a form of security. Instead, factors such as cash flow are taken into consideration as part of the lending criteria.
This is a question you should ask yourself before considering any business loan. There is not a person out there, including a potential lender, that knows your business better than you do. That includes your business goals, financial position, and ability to repay any additional debt. In situations where there is sufficient collateral, a secured business loanshould be preferred. If you need funds quickly and have the capacity to pay off a loan with a higher interest rate, exploring an unsecured business loan is a viable option. Factors that should be given careful thought include the loan amount, fees and charges, along with the terms and conditions.
Now that you understand the key concepts, here are some of the advantages and most common reasons to consider an unsecured business loan:
This is a distinguishing feature of unsecured loans and one of the main attractions associated with them. Unlike other small business loans, unsecured loans do not require any collateral to obtain finance. As a result, you do not have to be worried about losing personal assets such as your home or motor vehicle. This reduces the risk for the borrower and allows you to maintain full flexibility by having separate investment loans.
Small businesses can get easy access to funding through an unsecured business loan. Unlike major banks, alternative lenders such as Simply Funds make it easier to qualify for a loan. Relaxed lending criteria, a streamlined application process, and the absence of collateral simplify the lending process. There is no need to conduct a valuation on real estate as no collateral is being used, with an answer and estimated loan summary provided in a matter of hours.
A streamlined application process allows small business to obtain funding in as little as 24 hours. This is not possible with most major financial institutions such as banks as they have stringent lending criteria and a range of minimum requirements. A distinct feature of Simply Funds fast business loans is an application process that can be completed in minutes. It is an obligation-free process with no credit check conducted for pre-approval. In many instances, there is no need to provide detailed financial documents such as tax returns. Simply Funds flexible lending criteria allows you to obtain finance using basic personal and business details.
As we are not bound by strict lending guidelines, Simply Funds can tailor an unsecured business loan that suits your business purposes and requirements. Our team of experts specialise in dealing with businesses that require instant funding. We will advise you on the most appropriate loan option and design a repayment plan that is aligned with your cash flow. This may include making no repayments for a certain period and subsequently allowing you to make full use of the funds.
Taking one step at a time and slowly expanding sounds like a sound business plan. It generally means minimal debt which translates to lower levels of risk. What the ‘slow and steady’ mentality does not consider is that it could mean missing out on opportunities that can provide significant financial benefit. A simple example can be the removal of a key competitor from the marketplace. In such instance, an opportunity presents itself to acquire new clients and take a bigger piece of the market share. Winning new contracts may require you to quickly expand your operation. This may include new equipment, additional inventory, and the requirement for more staff. Obtaining finance using an unsecured business loan will allow you to capitalise on opportunities and catapult your business into a better financial position.
Short-term business loans are a viable option for those with a bad credit history and no collateral. This includes established businesses or start-ups with a low credit score or previous defaults. Almost all major financial institutions instantly reject applications from businesses with previous defaults (no matter how small). Unsecured loans such as bad credit loans can also be an effective way to improve your credit rating. Most unsecured loans are for a small amount that is to be repaid within 12 months or less. This allows businesses to improve their credit health which can create additional lending options in the near future.
For more information regarding unsecured business loans, Contact Us today.
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If you require additional cash flow for your business or other personal reasons, using the equity in your property may be a viable option. Contrary to the thoughts of many, you can use personal real estate which has an existing mortgage as security for a loan provided there is equity available.
Whether to invest in working capital, upgrade premises or facilities, purchase equipment or buy property, a second mortgage loan (or Caveat Loan) can provide money in less than a week from application to released funds.
Throughout the course of running a business owners are faced with difficult decisions and constant challenges. Among those are decisions relating to cash flow management, and more specifically, business finance.
Caveat loans (https://simplyfunds.com.au/blog/fast-caveat-loans/) are a financial solution for businesses, particularly useful for start-ups and commercial property investors. A caveat loan is a fast funding loan that is secured against a property. I
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A Bizcap provides both Unsecured and Secured loans to Small Business Owners. When assessing a loan application Bizcap generally doesn't take into consideration if a prospective customer has specific assets to provide as security. However:
(a) if the loan amount is above $30,000 (or any other figure which Bizcap determines from time to time), Bizcap will, under the loan agreement take a charge. For a corporate borrower and any corporate guarantor, the charge is over all of that entity's present and after-acquired property (that is. the security is not over specific assets but any and all assets which the entity may have). For a sole trader borrower and any individual guarantor, the charge is over its current and future real property; and
(b) in certain instances, for example, where the loan relative to the cash flow of the borrower is of a size that warrants the provision of security over specific assets. Bizcap may require specific security to be granted over those assets. Bizcop may register its security interest(s) under relevant legislation, including the Personal Properties Securities Register and the register held under the Real Property Act 1900 (NSW) or Its equivalent.
I n addition. Bizcap may take personal guarantees from directors of corporate borrowers, directors of corporate guarantors and certain individuals. No registrations are made in respect of guarantees.
Simply Funds operates an online information service that seeks to introduce Australian businesses to potential funders. Simply Funds does not provide any credit, financial products, or financial advice – either to individuals or businesses.
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