Having a great business idea and building an enterprise is never an easy project. Sometimes we start out well, but we don’t have the revenue to develop the business and make it really successful. If you want to build an empire, you’ll need capital. If you don’t have plenty of money lying around to invest, you’ll need to find an investor. When it comes to business loans, you’ve a choice between secured and unsecured.
Secured Loan
An example of a secured loan is a mortgage. When you borrow money from a bank, they need some security to ensure they don’t lose the money if you cannot pay back the loan. When you take out a secured loan, you pledge a specific property to the lender. If you fail to pay back the money, they have the right to sell your property.
Unsecured Loan
An unsecured loan is different to a secured loan. When you borrow money, the lender is taking all of the risk as you don’t pledge any property to the lender. Unsecured business loans and other types of unsecured loans are issued on the basis of your creditworthiness. If you can prove you have a stable income and a business that has been operating for a specific period, they’ll approve the loan. Because it is unsecured, you’ll usually have to pay a higher interest rate.
Building Your Business
- Accommodating – If you’ve been turned down by investors or rejected by a traditional bank for a secured loan because you don’t have any collateral, there are plenty of alternative lenders who can offer you unsecured business loan options. Alternative lenders understand your predicament – startups have no capital – that’s why they help eliminate this requirement.
- Fast Turn Around – Time is precious in business and waiting weeks to be approved for a loan isn’t helpful. Alternative lenders offer a quick processing time that allows business owners to take advantage of opportunities.
- Freedom to Borrow – With an unsecured loan, you have the option to borrow a small amount of money to cover a tough period. Secured loans have longer repayment periods that don’t suit SME’s.
As you can see, there are many good reasons to opt for an unsecured business loan to help build your business. They offer an easy online application process that can be completed in a matter of minutes. Once you’ve been approved, the funds will be transferred to your bank account that same day.
