Having a steady cash flow to manage operations expenses and grow business is one of the top priorities for small business owners. While large businesses have access to funding from banks, small business owners do not get access to funding so easily. Amongst the various loan options available to small businesses, most business owners prefer an unsecured business loan over the other types. In this article, we will discuss why small business owners in Australia prefer unsecured business loans australia over other types of funding.
So here are the 7 reasons why unsecured business loans are preferred:
⦁ Fast access to funding
One of the most critical things for small business owners is agility. Hence, when they are looking for expanding their business, or buying some additional stock or hiring new staff for a season, they need quick access to funds. Unsecured business loans can be availed by small business owners on the same day or within a couple of days. Hence most business owners prefer unsecured loans to other options.
Borrow any amount you need
Unlike bank loans, unsecured loans are available from $5,000 to $500,000 depending on your time in business, turnover, and credit score. Hence, even if you are looking for some quick cash for meeting an urgent requirement, you can avail an unsecured business loan.
No collateral or security needed
This is probably one of the main reasons why business owners prefer unsecured loans. While most banks or other loan options would require you to pledge an asset or collateral as guarantee against the loan, unsecured business loans, as the name suggests do not need you to do that. The loan is available to you purely on the merit of your business. The risk associated with losing a personal property or collateral is not there in this case.
Flexible repayment terms
Most unsecured business loans come with flexible repayment terms. So, as a business owner, you can choose to pay weekly, fortnightly, or even monthly based on the terms you negotiate with the lender. The terms are usually decided at the time of finalizing the loan in discussion with you.
Easy paperwork and documentation
Unlike bank loans where you need to submit a lot of paperwork to get your business loan processed, unsecured business loans require very minimal documentation. Most lenders will ask for a 6-month bank statement, a copy of your driving license and a few other documents to sanction your business loan. This agility and speed in securing the funds is what makes this a preferred loan option by most business owners.
Multiple Lender Options
When you opt for an unsecured business loan, you have the option to choose from multiple lending partners. A business loan intermediary like Capital Boost can help you choose the right lender suited to your business need. Since each lender has a criteria on who they can lend to and how much they can lend, an intermediary can help you identify the lending partner suited to you needs.
Last but definitely not the least, a credit score is an important factor that decides if you are eligible for a loan. In case you have a poor credit history or have had some defaults in the past, not all is lost. There are a few lenders available in the market who have a bigger appetite for risk, and they might be willing to offer you an unsecured business loan. The interest rates might be on the higher side, but you will have access to funding if you can establish how you intend to repay the loan amount.
It is often challenging for small business owners in Australia to secure the financial aid they need for growth. And if the business is relatively new or has a lower turnover, then it becomes even more challenging to avail funds from traditional banks. Unsecured business loans often come as a huge relief when there is a pressing need for cash to meet operational expenses or working capital needs. However, it is not often easy to understand which lender or offer is right for your business. This is where a business loan intermediary comes in to help you make the right decision.
At Capital Boost, we have helped a lot of a small businesses in Australia secure the right funding they need for their business in the past 5 years and continue to do so. Our understanding of lender criteria along with our understanding of your business helps us place your application with the right lender and secure the right funding needed for your business.