An unsecured small business loan allows you to take out a loan without having to put up any personal or business collateral. One way to think of it is as a credit card — you don’t have to put any assets up to get this type of loan.
Also, in the event that you’re unable to make the payments, the lender can’t sell off your personal or business assets. In addition, unsecured small business loans are granted mostly based on your credit history, so if your business hasn’t been in operation long enough to meet a traditional lender’s requirements, you can still obtain financing. Terms on an unsecured small business loan can range anywhere from 12 to 60 months, with rates starting at 6.78 percent.
Pros of Obtaining a Small Business Loan
- Does not require a business owner to put up assets for approval.
- If you have a great credit history, your approval rate will be high.
- No pre-payment penalties in most instances; if you pay off your loan quickly, you save on the interest.
- Minimal paperwork required to obtain one means faster approval.
- Cash available for any use.
- Likely to have a fixed interest rate.
Cons of Obtaining a Small Business Loan
- Interest rates may be higher than if you secured the loan with an asset as lenders need to offset the higher degree of risk involved.
- Higher interest rates cause individual loan payments to be higher.
- If you have poor credit, or are a new company, you may have difficulty obtaining one.
- Terms will likely be shorter than other forms of financing.
- If you are unable to quality for a small business loan, don’t worry. There are other secured small business financing solutions that may better fit your needs or offer you more affordable terms.
If you need help in finding out what type of loan is best for your small business, AmOne is here to help. Since 1999 our free service has helped over one million businesses obtain the loans they need. AmOne’s financial search specialists can be reached toll-free at 1-800-781-5187. You can also learn more information about AmOne and about your unsecured small business loans options on our website.