There are many types of business loans on offer in today’s booming finance market, from traditional secured bank loans to specialised financing options like merchant cash advances or invoice finance.
The most popular option for Australian small businesses is the unsecured business loan.
Very few SMEs meet the stringent lending requirements of the high street banks, who generally require two to three year’s profitable trading history, a high minimum turnover and collateral for the loan.
Unsecured loans, on the other hand, are on offer from a wealth of alternative lenders, some of whom are even willing to lend to businesses with poor credit ratings.
Unsecured loans are generally more expensive than secured loans, since they are much riskier for the lender – but many business owners decide that the cost is outweighed by the benefits of ready access to finance.
Many businesses simply don’t have assets to offer as collateral for a secured loan. As a small-business owner you may have the option to use personal property like your home as security, but this is an extremely risky strategy – you could end up losing both your home and your livelihood if your business fails and can’t repay its loans.
With unsecured loans you can avoid that risk in exchange for a higher interest rate.
Applying for a traditional bank loan can be a complex process, involving the preparation of business plans and strategy documents, and the provision of full financial statements and extensive other supporting documents – not to mention meetings with lending representatives to answer detailed questions about your business.
An unsecured loan application can often be made online in a few simple steps – complete a form, upload far fewer supporting documents, and submit. For busy business owners with multiple demands on their time, this simple process can be very appealing.
While high street banks can take weeks or even months to assess a loan application, online applications for an unsecured business loan are usually assessed on the spot, with an instant decision or a short follow-up phone call with an advisor.
If your application is approved, you may have funds in your account within days or even hours – which makes this a very popular option for businesses that need a fast cash injection to cover working capital shortfalls, or to pursue an exciting, time-limited growth opportunity.
With so many lenders out there, it’s likely that you’ll be able to find one that is willing to work with your specific business model, allowing you to match the amount you borrow, your interest preferences (fixed, variable or combination) and your repayment terms to your specific business needs.
For example, if your business is seasonal you may be able to agree a repayment schedule that allows you to make additional repayments during busy periods, but to reduce the amount you pay when your sales are lower.
Check out https://www.unsecuredbusinessloans.com.au/ to learn more.
Brought to you by Shaun McGowan, Co-Founder, Lend