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When an unsecured business loan is right for you

When an unsecured business loan is right for you

By: Sandy Kenrick | 15th May 2020

When you’re in business, you soon start noticing that cash flow plays a fundamental role in keeping everything going. At times, you may need funding to secure an additional project or to expand your business. An unsecured business loan could be perfect for that purpose.

Let’s take a look at what unsecured business loans are, how they work, and whether you’re in a position to benefit from one.

What is an unsecured loan?

In contrast to a secured business loan – which is backed up by security, usually the assets your business owns – an unsecured loan doesn’t require company assets as security.

With an unsecured loan, there’s more risk for the lender as they have no guarantee of getting their money back. As a result, these loans tend to be for smaller amounts and take place over shorter periods of time. They essentially work like a personal loan, but for a business. 

Who could benefit from these loans?

Businesses that need a speedy cash injection, where the amount is not too big, might consider an unsecured business loan. It’s also a handy source of finance for those who don’t have the assets to back any other type of finance option.

Businesses that could benefit from an unsecured business loan include:

What are the benefits and pitfalls?

As with any loan product, there are advantages and disadvantages attached to unsecured business loans.



Are these loans easy to get?

Financial institutions have a responsibility to their shareholders and an obligation under various financial governing bodies to control their risk. An applicant hoping to access an unsecured loan will need to satisfy certain criteria, such as:

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