Can You Get an Unsecured Business Loan?
Do you need a loan to start or expand your business but lack the collateral to qualify? It is possible to get an unsecured business loan. An unsecured business loan is a loan that does not require collateral, such as equipment or property. An unsecured business loan will typically cost more than a secured loan, but it can help establish and grow your business. Here are some pros and cons of applying for an unsecured business loan.
Pros of Unsecured Business Loans
You do not have to use personal property as collateral for an unsecured business loan. You won't lose your property if you default on the loan. Furthermore, since unsecured business loans do not require collateral, they can be easier and faster to apply since fewer steps are involved in the application process. You may qualify for lower interest rates on your unsecured business loans if you have good credit, a good revenue history, and a good track record with lenders.
Cons of Unsecured Business Loans
Due to their higher risk profile, unsecured business loans are more complex and expensive than secured loans. Because of this increased risk factor, these loans usually have higher interest rates than other types. Due to the lack of collateral provided by different financing options, many lenders may require an additional assessment to determine a client's creditworthiness when considering these types of loans.
The unsecured business loan has pros and cons, but it may still be a viable option if you still need personal property or equipment as collateral to secure a secured loan but need additional capital to grow or establish your small business. Getting an unsecured business loan can help your small business with much-needed funds without tying up valuable resources as collateral.