In What Situations Would An Unsecured Business Loan Be Advantageous?
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As a business owner, there are many loan and financing options available to you. Typically, business loans will require some sort of collateral or assets to secure the loan. However, there is another type of loan that some business owners may consider much more advantageous. These are called unsecured business loans. Read on to learn more about these often overlooked options.
An unsecured loan has many advantages for the borrower. Not only does the loan not require collateral, but you often don’t even need to have a great credit history. In addition, paperwork is minimal and you get the money very quickly in comparison with traditional loan options.
There aren’t many disadvantages to unsecured business loans, which is why they are becoming more and more popular with savvy business owners and entrepreneurs.
Let’s say you are a business owner who manufactures a product. If you suddenly receive a large order for your goods, but your manufacturing process can’t accommodate it, then you will want to find a way to expand your manufacturing process quickly. This may include buying more manufacturing space, new manufacturing equipment, additional raw materials and hiring additional workers. Expanding very quickly in order to accommodate that large order is certainly possible with a traditional loan, but not probable. In this case, acquiring an unsecured business loan would be ideal. You would receive the cash infusion quickly in order to expand, and also at relatively little risk to you.
Or let’s assume you are a budding entrepreneur who has had their eye on that perfect retail space for a new store. Perhaps that space just opened up or just fell in price, yet you don’t have all the capital needed in order to secure a loan or make a down payment. In this case, using an unsecured business loan would be a good move. Since you receive the money quickly, you can snatch up that retail space at a bargain price and begin setting up your store. With retail stores, the more quickly you can begin bringing in foot traffic and buyers, the more quickly you can begin generating revenue.
Another situation in which an unsecured business loan would be useful would be if your business is in trouble. Perhaps you have another lender who has called in his loan and it must be paid back quickly or you will lose your business. In this case, getting that quick cash infusion from an unsecured loan could potentially save the business, allowing you that precious extra time to turn your business around.
Maybe your business could greatly benefit from a marketing or advertising campaign? Yet you don’t have the liquid cash in order to begin the kind of marketing campaign that you need. An unsecured loan would work great in this situation as well. You can get the cash you need to begin marketing, and a good marketing campaign can improve your revenues greatly, therefore you should be able to pay the loan back quickly.
These are just some of the possible situations in which an unsecured business loan would be advantageous.
This Post is written by Navir a finance student and a part time blogger.
