Most loans fall into one of two categories – secured or unsecured. An unsecured business loan is exactly what it sounds like, meaning it’s not secured against any property or assets.
Paying off more than one debt at a time is not uncommon. But if you’re struggling to balance your debt repayments, debt consolidation may well be worth considering.
There are a few extra risks for the lender that come with an unsecured loan. If the person or business with the loan fails to make payments, the lender can’t claim assets or property. And since these sorts of loans are a bigger risk for a lender, it usually means they come with a higher interest rate.
That’s not to say they’re a bad option. Sometimes they’re the best option for a new business that hasn’t had the chance to build up assets or collateral to secure a loan with.
With an unsecured business loan, an amount is lent against the cash flow of a business, so it’s often a better option for businesses who provide a profitable service without the need for equipment or assets. An unsecured business loan can either be in the form of a traditional loan with a specified term and a fixed interest rate, or as a line of credit with a variable interest rate.
You’ll need to be able to prove consistent monthly revenue for a business loan like this, and there is usually other criteria to meet. This can include having a viable credit rating, a guarantee to ensure that the loan will be repaid, or evidence of a minimum of 12 months of trading.
Yes. We can talk you through secured or unsecured business loans, an overdraft, or a small business line of credit, too. Melbourne Finance Brokers are accredited with over 40 lenders and has a range of business finance products at their disposal, so get in touch with us today to talk about what’s best for your business.
Melbourne Finance Brokers has been helping Australians for over 20 years and has built a reputation of providing excellent customer satisfaction and our empathetic staff who are willing to help your business grow
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