The Top 5 Reasons Why You Should Get an Unsecured Business Loan
In the world of business, doors of opportunity can open and close in the blink of an eye. The best and most profitable business owners are those who know how to identify the opportunities and take advantage to help your business grow.
Unfortunately, prospects for growing your business often times require capital, and smaller and medium sized business (especially newer businesses), often times do not have the liquidity to pull from savings nor the financial stability that many big banks require. Finding unsecured loans for businesses is often the only option available that will allow you to take your company to the next level. Below, we look at the top five reasons why you should consider applying for an unsecured business loan.
1.Access, Access, Access
Access to credit is essential for businesses of any size. Small and medium size enterprises, however, depend on credit both for starting up a business venture, expanding into new markets, and making it through those inevitable rough times that are bound to come along.
Regrettably, the big banks and financial institutions are not always willing to work with smaller businesses who do not meet their strict and rigorous conditions. For example, to be able to apply for a sizeable small business loan, most banks will require that a small business show at least three years of profitable returns. Obviously, new companies simply cannot meet these prerequisites, thus excluding them from access to credit.
Unsecured business loans, however, often require little to no collateral, and several lenders will be willing to lend to companies that have bad credit or who are just starting up. Because these types of loans represent a higher risk to the lender, the interest rate is certainly going to be higher. However, the relatively easy access to credit often outweighs the drawback of higher expenses associated with the unsecured loan. In the best of cases, the access to credit will be able to open more profit opportunities for your company, thus allowing you to pay off the unsecured loan in considerably less time than the originally agreed upon term.
2.Expand Into International Markets
Most people have the idea that participating in global trade is only possible for large, multinational corporations while smaller, individual and family owned businesses are stuck to doing business in the limited geographical scope of their community. The increasing connectedness of our world through more efficient and inexpensive transportation technologies, along with the ability to connect with potential clients from around the world through the internet, social media, and e-commerce platforms, however, makes it possible for even the smallest business to take advantage of global opportunities.
The Small Business Association of Australia believes that there are numerous opportunities for small businesses to participate in the global market, including businesses in the tourism, agricultural, education, real estate, retail, and machinery sectors.
3.Limit the Risk to Your Personal Property
Often times, when small business owners apply for a bank loan to get their startup of the ground, the only collateral that they can offer is their personal property or home. Keeping your business life and finances separate from your personal life is essential for long-term financial stability. However, when you urgently need a loan, and the bank is requiring some sort of collateral, our homes are often the most valuable financial asset we own.
An unsecured business loan will require no sort of collateral, meaning that you will not have to worry about bad business leading to the loss of your home or other important personal financial assets.
4.Quickness and Ease
Applying for a business loan from a traditional bank is often a long and tedious process. When you need quick access to money to take advantage of that once in a lifetime business prospect, the paperwork and protocols at the bank can seem to go on forever.
An unsecured business loan, on the other hand, is usually a quick and efficient way to get the funds you need. Most applications can be done online, and do not require that you head to a bank, or gather mountains of documents that need to be signed and notarized. Furthermore, once you have applied for the loan, most unsecured business loans will be approved or denied within days or even hours. If you do not receive an instant decision, a simple follow-up phone call will let you know whether you have been approved.
5.Plenty of Options to Choose From
Lastly, by opting for an unsecured business loan, you will be able to choose from several different lenders on the market. One of the mistakes that many small businesses make is not thoroughly researching the loan market. In smaller towns, there may be only a few banks that offer small business loans, and because of the lack of competition, you will most likely not get the best loan offer (if you are accepted at all). The proliferation of online lenders of unsecured business loans, however, means that you can browse several different loan options to find the best terms and rates for your business needs.
Written by Simon Isaacs, Founding Director of ebroker