Why Consider Unsecured Funding?
If you’re consolidating business debts, or looking to expand your business, business financing, such as unsecured business funding, could be the answer. Secured business loans and unsecured funding are the two forms of business funding. A secured business funding is secured by collateral, while unsecured business funding is not.
Unsecured business lenders do not need the company to put up any collateral to get the money. You must, however, fulfil the income and credit criteria. Unsecured business funding varies in size from $5,000 to over $500,000, depending on the company’s size and credit score. Some lenders can also provide companies with an unsecured funding revolving credit line.
Advantages of Unsecured Funding and Why You Must Consider It?
In order to get funding from financial institutions, particularly conventional ones, small and medium businesses (SMBs) typically need collateral or assets as a guarantee. Taking funding from the informal lending market, on the other hand, means paying higher interest rates, which reduce profit margins. Unsecured funding without collateral are now feasible for SMBs, thanks to the rise of non-traditional technology-driven lending institutions.
There isn’t any need for collateral.
Unsecured business loans are a great way to get cash for your small business because they don’t need any collateral or security for that matter. The owner does not need to be concerned about losing assets or the company if the firm does not work out or encounters problems.
Criteria for Minimum Qualification
While the requirements for unsecured business funding are less strict, you can need to demonstrate that you have a consistent monthly income. You may be required to include a financial statement from the previous six to twelve months to do so. It’s also possible that you’ll be asked for your permanent account number (PAN). So, if the documents are legitimate, you have a good chance of getting an unsecured funding.
Since the lender does not need several documents, a small unsecured business funding can be obtained rather really quickly. The approval procedure is straightforward, streamlined, and very fast & rapid. Furthermore, you can complete the funding application online, which saves you time and effort as well.
Higher funding Amounts
You may apply for a larger unsecured business funding because no asset serves as collateral, restricting the funding size. In contrast, if you apply for a secured business funding, you will only be approved for the sum that the collateral is worth.
In most cases, financial institutions expect you to repay the funding in fixed monthly instalments for a set period. Even if you qualify for the credit, repaying the funding sum can be challenging at times. In this case, unsecured funding could be the best option since these lenders also have flexible payment options.
Relationships that last a long time
Some lending programs, such as unsecured lines of credit, make capital available on a revolving basis for small business projects. Since the borrower is required to pay regularly, these agreements increase the lender’s trust also.
Paperwork is limited.
Unsecured business funding needs less documentation because there is no asset involved. People are often only required to submit scanned copies of their last six months’ financial statements via fax or email to obtain an unsecured business line of credit for their start-ups. If you apply online, you must fill out some basic information and the specifics, and the lender will immediately move & transfer the required funds to the borrower’s account.
Unsecured business funding is also becoming a lifeline for micro, small, and medium-sized businesses (MSMEs). A few financial institutions in the country have recently begun to provide unsecured funding to MSMEs. With all of these advantages and easy accessibility, you no longer need to be concerned about investing in your business. Unsecured business funding is a one-stop solution for all of your financial needs.
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