14.6 C
Tuesday, May 21, 2024

No products in the basket.

HomeFinance and AccountingBusiness LoansSome great benefits of unsecured commercial loans for expansion

Some great benefits of unsecured commercial loans for expansion

Business financing is always not straightforward. Loans for expansion are still there, but you need more than excellent Credit to secure affordable credits for your company. Commercial development can occur in different ways and for varied reasons. You can expand your market share by directly buying another firm in the industry. Another approach would be to start another business from scratch or buy shares from an existing business enterprise. The reasons for takeover or any kind of expansion may range from a desire to control a certain percentage of the market, production rights, etc.

Many lenders, such as 365 Solutions, will readily approve funds for your goal if your creditworthiness is excellent and market dynamics do not compromise the future of your business.

This article outlines some of the benefits of securing non-collateralized financing for your long-term business goals.

Which are these unsecured business loans?

Equipment Financing

This type of financing lets you take a loan against the equipment you are purchasing. It, therefore, works like auto loans. This type of loan protects you from using your assets as security. In an instance where you are unable to pay back the debt, the lender will only seize the equipment. Well, it may inconvenience you but not as much as it would set you back when you use your assets for the loan. 

Merchant Cash Advance

When looking for quick cash for the business, a merchant cash advance is a speedy opportunity to receive huge chunks of finances. What is needed is for you to pledge a certain percentage of future sales to the lender. The money you will pay back will depend on the volume of sales you recorded over the loan period. If you make a few sales, then it means you’ll pay less and vice versa.  

An unsecured Business line of Credit

Such loans are beneficial for business in many ways. You can use the loans for purchasing new equipment, acquiring new inventory, etc. basically, this kind of financing can be utilized for any business function, including expansion.

Merits of using unsecured business loans 

  •    The loan inquiry process is short

Lenders are very keen when they want to finance a business. Then do not want to lose their money to individuals who will have challenges in paying. This is why lenders undertake underwriting process seriously. The process involves scrutinizing tones of business documents you provide them. Well, the online process is much easier; however, if you want better loan rates, then conventional lenders will be your to-go-to guys. Sadly, this process can be very lengthy. Adding the need for collateral and documentation for the same in the mix, then you get a total time crisis.  

It takes the lender only a few documents including pulling some credit checks to ascertain that your credit history is satisfactory before suctioning a loan in your favor. It would take lesser time than the usual assessment and proof.

  •   Security is not required

Secured loans have their benefits to persons and companies in general. The most obvious one is that you can secure financing at a low credit rate. On the negative side, say you have secured your loan against your home, and then you stand to lose your house if you become unable to repay the loan in time. The same applies to the business. If you were to secure the Credit with your business or assets of the company, then you stand losing those assets if the firm does not perform well to enable you to maintain timely instalments on the repayments. Therefore, being able to secure a loan that doesn’t ask for collateral eliminates this risk factor allowing you to run your business without inconveniences. 

  •    Less Documentation

Usually, lenders need assurances about your real financial position and if you can pay back the loan. This is why you are encouraged to know the requirements before applying for the finances. With a business, you will have to tender in more documents than if you were doing it personally.

However, with unsecured loans, your time on the loan application course shall be reduced since the lender shall be receiving lesser documents than usual. The fact that there is no collateral means that you will not be needed to present papers related to the asset provided as security and the equity you will be holding in the property.

Aside from these, the lender shall nonetheless require the following documents, among others:

  • Revenue proposal: – these are documents that show past, present, and future company revenue projections. Your business should be able to afford an expansion loan you seek. And, the lender will know from this document.
  • Financial statements: – these are statements that show the movement of cash, asset base, and general practices in your business. The most accounts that are presented include; cash flow statements, the balance sheet, and the journals.  
  • Tax returns: – tax remittance statements prove that more than anything, you are legitimately registered, and you submit necessary taxation to the government. The lender will also want to know if your statements and the tax returns marry; so that they can see if you play fair in terms of finances. 
  • Business plan: – a business plan is a document that contains the company’s objectives, long-term and short-term goals, and the proposed profile and management structure. Also, it has information about how the firm plans to raise funds. This information is very crucial for the lender, especially when trying to determine the amount your business is eligible to receive. 

The bottom line

Several kinds of Credit are available to all types of borrowers who are creditworthy. You can easily be able to get a business loan with the intention of expanding without necessarily committing some appraisal for the same. However, before setting out to get a loan for growing your business, try hard to get all the facts, requirements, and benefits you stand to enjoy.

Recent Articles