When small businesses obtain funding through traditional financial institutions, it’s almost always in the form of a secured loan. In these instances, small-business owners agree to put up some collateral—usually property or equipment—in exchange for money. In the event that the borrower defaults on the loan and is unable to repay, the lender then assumes ownership of the collateral and sells it in an attempt to retrieve its funds.
But small-business owners who aren’t too keen on the idea of putting up their homes to get a loan aren’t completely out of luck. Thanks to nonbank lenders, you can apply for unsecured business loans that don’t require borrowers to put up any collateral. Oftentimes, these loans are considerably larger than funding typically approved by traditional banking institutions. Small-business owners can receive unsecured financing to the tune of $1 million, so a lot of money is available if you need it.
Whereas banks typically require small companies to submit detailed business plans and extensive financial documentation when they apply for loans, alternative lenders are known to have relatively simple application processes for the various unsecured loans that they offer. There is a minimal amount of paperwork required, and approvals are still possible even if businesses don’t have the best credit—so long as they have strong cash flow.
After a small-business owner decides that his or her company needs outside funding, time is of the essence. There’s no time to wait around for money to come in; cash is needed and needed quickly. Good news: The approval process for an unsecured business loan is incredibly quick. While banks might take as long as 60 days to fund a small business, the money from an unsecured business loan is often available within 24 hours—which means that organizations are able to make moves right away.
It’s worth noting that because of the ease with which businesses are approved and the fact that they don’t require any collateral, unsecured loans typically carry higher interest rates than standard bank-issued loans. So yes, you might end up having to repay a little bit more money when you are approved for an unsecured loan. But in the event that your business is unable to repay the loan, you won’t have to worry about the lender seizing your property. When you frame it that way, the trade-off isn’t that bad.
Unsecured business loans give your company the peace of mind and financial freedom that come with knowing you’ll be able to cover any unforeseen expenses or hop on any exciting opportunities that present themselves. Instead of worrying about how bills are going to be paid at the end of each month, unsecured business loans can help provide a financial cushion that allows your small business to easily absorb these kinds of recurring expenses.
As you begin your search to find the unsecured business loan that makes the most sense for your company, you’ll quickly see that there’s no shortage of options. In the aftermath of the recent financial meltdown, banks have typically loaned fewer and fewer dollars to small businesses. The demand for loans, of course, has not abated. As a result, numerous alternative lenders have stepped in to fill the void.
You’ll want to do your due diligence to partner with the best alternative lender for your unsecured business loan. Look for lenders that have long track records of helping small-business owners take their companies to the next level. Great lenders are flexible and offer world-class customer service and repeat-customer benefits. They are also up-front about their interest rates and any other kinds of fees, so you don’t have to worry about receiving an incredibly hefty bill that you weren’t budgeting for.
Instead of going through the arduous process of trying to secure a loan from a bank—and most likely not obtaining one due to the bank’s pickiness and hesitance to lend—shop for an unsecured business loan today. Once approved, you can start investing your money tomorrow.