Small Business Loans Unsecured

Not long ago, when people are given loans, they usually have some sort of protection for it. It could be any possession from jewelry, cars, motorcycles, even house and lots – there’s got to be a collateral for it. But as time passed by, these became fewer and fewer, in fact, even some large national banks offer small business loans that are unsecured.

Although they’re plenty, finding one is not always a guarantee. There are business funding companies and lenders who provide unsecured small business loans, while a majority of them ask for some type of security.

Being a small business owner, it is always important to note that borrowing money is not a sign that your company is failing. In fact, it could be the other way around. Small business loans may be used to expand the business; it can be used to purchase supplies and equipment – it could be for whatever reason.

But how can you find unsecured small business loans?

What Are Unsecured Small Business Loans?

Before we dive into the topic in detail, let us first define what unsecured small business loans are. By the simplest definition, small business loans that are unsecured are the type of loan that is supported only by the borrower’s credibility.

They get approved and the funds get delivered to the borrower without securing any type of property or possession. Most usually, online lenders approve these types of loans with a catch – the interest rates are quite higher than those loans that are secured.

There are quite a handful of pros and cons that unsecured small business loans offer and here are some of them:

Unsecured Small Business Loans Pros

Faster Processes

Because we defined unsecured loans as the type of loans that do not have collateral, the lender would not be required to evaluate or to assess anything. Usually, these unsecured small business loans are approved within days compared to approving collateral loans which may take weeks to get approved.

Good Impact to Credit Standing

After your repayment terms, your credit standing will positively be affected and it can skyrocket. It can help that you properly pay for your loans because you’ll be able to use it in the future.

No Risk

Relative to other types of loans, small business loans that are unsecured carry no risk to your properties and your assets because you wouldn’t be required to settle a collateral or a security like jewelry, houses, land, cars, and the like.

While they carry a lot of benefits, there are disadvantages to it, too.

Unsecured Small Business Loans Cons

Less Flexible Payment Terms

On a usual basis, the repayment terms are less flexible because they wouldn’t be able to adjust it for you, compared to how you do with banks. For instance, if they have a program that will require you a certain amount each month, you wouldn’t be able to tweak that easily.

They’ll follow what their rates and terms are and they would less likely to negotiate with you on that.

Higher Interest Rates

Compared to other options and sources, unsecured small business loans would have higher interest rates because the lender runs the risk of not being paid back. This will have a large impact on small business owners who would borrow having bad credit because these lenders follow a standard on how much they need to pay.

Here at SoFlo Funding, it wouldn’t matter if you apply for our small business loans unsecured; we offer flexible and reasonable investment and payment plans to our clients. Not only do we help small business owners who have established small businesses, we assist entrepreneurs and even startup companies, too.