If you need a business loan but are not in a position to offer security, you do not have to worry. Unsecured business loans can save you from your situation, as they are loans for which there is no need for collateral or security.
They are provided by financial institutions to a business with insufficient collateral and even without satisfactory credit history or equity. Hence, unsecured loans help companies and individuals keep a level of income and capital they can use to grow their businesses, pay off loans, or meet other expenses.
Apart from being a security-less loan, an unsecured loan has several other benefits. And they are provided down below:
1. No Qualifying Criteria
Apart from the proof of having a stable income, there are no other qualifying criteria to avail of an unsecured loan. You might need to submit the financial statements for the last six months to prove your stable source of income. And you would also want to submit your IDs and address proof. With these, you can get an unsecured loan and meet your emergency business expenses.
2. Quick Loan Process
Normally, secured loan sanctions take time just because of the process involved. The method includes the submission of documents and the verification of the same. Meanwhile, as unsecured loans do not require any collateral or security, there is no considerable processing work such as asset evaluation. As such, minimal document verification is done very quickly, and the loan amount is sanctioned usually in a week.
3. Your Business Assets Are Safe
This one feature of the unsecured loan makes many small-scale business owners happy. Every asset that belongs to your business, like the building, vehicle, inventory, etc., is safe as you are not required to submit any collateral. Besides, failing to pay your EMIs is not appreciated, but still, the lender will not seize your business assets. Hence, it is a true secure loan option for a small business experiencing a financial crunch.
4. Improves Your Credit Score
It is a good chance for anyone who decides to cultivate the habit of financial discipline. And if you avail of an unsecured loan and pay the EMIs properly, it will help improve your credit score. Meanwhile, a good credit score can help you avail of vast amounts of loans in the future. So do not fail to use this chance if you are planning to expand ad grow your business in the long run.
5. Flexible Repayment Options
It is the most helpful feature that a small business owner can expect, as many financial institutions are offering unsecured business loans with flexible repayment options. Meanwhile, it is common for small businesses to struggle with the repayment as they are prone to encounter outstanding bills and irregular customer payments. Thus, there is no stringent time frame for repayment of loans.
6. Multi-Purpose Loans
There is no restriction on using an unsecured loan for any purpose. Also, there is no compulsion to submit the plans and proof of how you will use the loan amount. It can be used for any purpose like meeting the operational requirements, expansion and modernisation, hiring staff, getting new assets, or any other business activity. So, there are no questions regarding how the funds are used.
Finally, every business, due to the pandemic, did see a downfall in recent times. And among all the businesses, small businesses were hit the most. Meanwhile, the unsecured loan market has achieved considerable growth, helping most small businesses survive. Hence, unsecured loans can be considered one of the main reasons for the pandemic recovery.