Is it Safe for Small Businesses to Get Unsecured Business Loans?

If you are a small business owner, sometimes you may need to take loans in order to ensure that your business is running fine. You may either need the money to expand your real estate, buy some new equipment, and so on. In such a case, getting a loan in a short amount of time is a necessity. This is where Unsecured Business Loans can help you. 

What are Unsecured Business Loans?

Like we mentioned before, small companies that may need the money suddenly and sometimes these companies may not have the collaterals for security. Then these companies can take unsecured Business Loans. Most of the banks find it a risky opportunity to lend money to such borrowers and even if they do offer loans to them, the interest rates are higher than usual. An unsecured Business Loan is a loan that the bank will provide based solely on trust and the creditworthiness of the small business owner.

Who Gets These Unsecured Business Loans?

If you have a very strong relationship with the bank and have been a loyal and valued customer, you may qualify for such a loan. Also, if you have a credit score 750 or above (the higher the credit score, the higher are the chances of you returning the loaned money and hence are not a risk to the bank), it is easier to secure the Capital First Business Loan. So in short, someone can be eligible for an unsecured Business Loan if they can qualify these criteria:

• They have a good credit score – Your business and personal credit score should be good enough (750 or above) for the bank to give you an unsecured Business Loan.

• You have some years in business – Your business should be at least two years old (minimum is three months).

• Your annual revenue should have a minimum value and you must have had some earning in the last two years of your business, otherwise it is quite difficult to qualify for an unsecured business loan.

What Are the Advantages of Unsecured Business Loans?

If you are a small business owner and keen to take an unsecured Business Loan, you may have some doubts about how safe this loan may be for you. Some business owners feel that this loan may take away their business. However, this is not the case and unsecured Business Loans are actually very safe.

Here are some benefits of taking an unsecured Business Loan:

• You can easily get these loans:

Getting an unsecured Business Loan is very easy, provided you have a good connect with the bank. You don’t even have to pledge any collateral, which makes it even easier. The process of getting this loan is much simpler and has less documentation.

• Higher amount of loan:

You can get a high loan amount in comparison to other forms of unsecured loans like Personal Loans, Credit Cards loans, and so on.

• Faster approvals:

Since the loans don’t need collateral and a lot of documentation, it is much easier to get the loan approved. The online applications are short and quick and with just a few clicks of the mouse, you can get the loan and amount disbursed in your account.

• Your property and collateral are safe:

In any unsecured loan, you do not have to give the bank security of any collateral. As such, in case there are defaults, the bank cannot seize your property or your collateral without any court orders, thus making the loan much safer.

• The loan is discharged if there is bankruptcy:

If your business fails and you file for bankruptcy, the unsecured Business Loan will have to be discharged.

So, if you are a small business owner looking to get a loan to further your business, hope this article has given you enough information to get an unsecured loan.

Also Read: Here’s Your Mini-Guide to Business Loans

To apply online for Credit Cards, Secured Loans and Unsecured Loans, visit www.mymoneymantra.com, the leading online lending marketplace that offers financial products from 70+ Banks and NBFCs. We have served 2 million+ happy customers since 1989.