Many small businesses face a need from time to time; they need a cash infusion to keep things flowing
smoothly, to smooth the bumps in the road many small businesses often travel. Perhaps you need to
move to new property or offices. Perhaps you need some new machinery or computers to increase
productivity. Faced with these or similar needs, it is often prudent to consider getting an unsecured small
Small businesses do have options.
You might also want to consider getting a business line of credit. These are not addressed to any specific
need or purchase, they are more of way to have cash available should you need. But, if you have
business plans that specifically outline certain purchases or upgrades, an unsecured small business loan
would probably be in your best interest.
Secured loans and unsecured loans have their differences.
Consider a couple of factors when weighing the benefits of an unsecured business loan as opposed to a
secured one. One consideration will be the interest paid. Interest rates hover around the base being used
by the financial markets at the time, but they are not set and they can differ widely lender to lender. You
will pay lower interest rates on a secured loan.
Secured loans offer backup to the lender.
Secured loans are backed by collateral and this offers the lender security should the borrower default. For
instance: If you purchase real estate for you r company or a company vehicle, and you default on the
loans that purchased them, the lender can seize the vehicle or the property and sell it off to cover the cost
of the loan. With this reduced risk, the lender is willing to lend to a small business at lower interest rates.
Unsecured small business loans do have higher interest rates.
On the other side of the fence, loans with no collateral have nothing to back them up except the business
history and you r credit scores. These are used to determine the likelihood of repayment. You are
receiving money on your good name alone. But, this increased risk means higher interest rates. And
sometimes this can be a significant cost.
Risk-reward factors play a part in your choice of loans.
You have to weigh the risks and the rewards of each type of loan. If you have property to back up the
loan, that does not necessarily mean you should use it. Do not forget, if that loan is not repaid according
to the terms and conditions of the contract, the collateral is gone. It is never wise to put up personal
property as collateral for a business loan. You do not want to lose your home.
Small business owners should have contingency plans.
You should always have a contingency plan to leave your personal finances unscathed should the
business fail. You should always have plan to gracefully exit the business, personally and financially,
should it not work out. After all, you will want to start another business one day. Considering all this, you
will probably come to the conclusion that an unsecured small business loan is your best bet, even if the
interest rates are higher.
Mary Wise is a personal loan consultant who has been associated with Bad Credit Loans and has more
than thirty years of experience in finances. She has helped a lot of people to obtain Fast Unsecured
Loans, and many other products regardless of their credit situation. If you want to learn more about
Personal Loans you can visit her at BadCreditLoanServices.com