The key to getting the right finance for your business is to fully understand all of the options in front of you.
While getting unsecured finance can be easier and quicker, it may be beneficial for your business short and long term to consider whether a secured loan is best for you.
If you have the time to get financially fit, get your paperwork in order, and your finances are in good shape, secured loans can make a significant difference to your cashflow.
If you have assets such as property or equipment to borrow against, the repayments on secured finance could make a dramatic difference to your monthly business budget.
Secured finance is cheaper, of course, because the risk is lower for the lender. With a secured business loan, you pledge property or other assets that the lender can sell to repay the loan if you’re not able to make repayments. This decreases the risk for the lender; so secured business loans have lower interest rates than unsecured business loans.
When you have set up a secured finance facility you are paving the way for your future too. It’s much easier to repeat finance of this nature.
It may feel like the harder option when you’re initially looking at the challenge in front of you because there’s more legwork involved in ticking all the boxes. However, it’s a great way to get your business future proofed.
Ultimately, with unsecured finance, you’re paying for convenience.
If your business finances are in good order and you don’t need to pay for fast funds, you can make a saving. Saving on repayments will result in paying less over the lifetime of your loan, so you’re really reaping the financial benefits of being financially fit.
Imagine the difference between secured and unsecured finance is like a Friday night. Everyone wants to hear about all the fun, games and shenanigans (unsecured) but no one wants to hear about the sensible quiet night in (secured).
If you’re really looking to keep your financial repayments to a minimum you may like to seek a secured longer-term business loan. This will drive your repayments down.
Be clear on what you want the money for, and lenders will go over your credit report to ensure there’s no negative information there.
If you’re looking for the sharpest rate, your credit history has a significant impact on the rate that you’ll be eligible for. Afterall, it’s the closest lenders have to a written reference. So, it’s worth taking the time to check your credit report and score before even applying for a loan.
Go over your credit report to ensure all the information is correct.
Tidying up bumps in your credit path is all part of keeping your business financially fit and giving it the very best chance at financially flourishing, long term.
ebroker is Australia’s first and only fully independent, transparent matching platform where anyone can find and compare unsecured small business loans. Now working with over 70 non-bank lenders. Find out how we can help here.
Heath Fitzpatrick, Chief Operating Officer, ebroker