Nowadays, it is very much possible to secure financing for your business without having to pawn your assets or property as security. You don’t need to approach a bank for your small business loan requirements. Small business loans without collateral are offered by many financial companies.
Small business loans, which don’t require collateral, reduce the risk on your assets and personal property since the lender cannot take control over your assets and liquidate them. Unsecured business loans in Australia are faster to obtain than secured business loans, and they involve less paperwork. If you have a good credit profile, then you can even obtain an unsecured business loan for a larger amount.
Types of small business loans available without collateral
Before you get a small business loan, you should do your research on the various terms and conditions offered by various companies. You should check and compare your options before choosing the one that’s right for you. While compiling your business loan application, keep in mind that you should provide as much information as possible to show that you are a reliable borrower. There are many types of unsecured loans which you can obtain, and you should choose the one that’s right for you and your business. Some of these are:
Unsecured Business Loans
An unsecured business loan is usually obtained against the cash flow of your business, without the need to provide security. Any small business owner is eligible to apply for a business loan.
A small business loan which is unsecured can be obtained for an amount between $5000 to $500,000. The rates of interest vary from year to year and are based on the terms and conditions of your loan, but generally speaking, you may need to pay around 10% per annum.
The repayment schedule for your loan, can be daily, weekly, or monthly. The term period of the loan can range from anywhere between three months to three years.
An unsecured business loan is a good option for small businesses which do not have valuable assets yet need short term or low funding to meet immediate business requirements. Any business boasting good cash flow is a suitable candidate for an unsecured business loan.
Invoice Financing is a type of loan which allows you to borrow money against the outstanding invoices of your business. In invoice financing, you can repay the borrowed amount, once your client pays the invoices which were billed to him.
Invoice financing generally offers smaller repayment schedules but are fast and easy to obtain. It is possible to get the loan money into your account within twenty-four hours of the loan application. The financing for this type of loan is limited to the size of your invoices. There are no interest payments when it comes to invoicing of payments. However, the financing company will charge you a certain percentage of the money which is expected from the invoices.
A wide range of businesses are eligible for invoice financing, including small businesses, large businesses as well as seasonal businesses. Invoice financing is meant to be a solution which helps your business meet its cash flow requirements while you await payments from your invoices. It can help your business stay afloat during lean periods.
Read this blog: Why you need invoice financing for your business
Business Equipment Financing
Business Equipment Financing is a type of funding which provides the capital you need in order to acquire equipment which may be essential for the running of your business, such as heavy machinery, specialised equipment, or IT devices. A business equipment loan allows you to get the equipment you need now, and pay for it according to a repayment schedule decided by your lender.
Any business owner is eligible for equipment financing. The lender will usually check your business cash flow and the strength of your business when considering your application. Equipment financing is ideal for business owners who need to buy expensive equipment to run their business, but do not have the immediate capital needed in order to buy the equipment outright.
Business Line of Credit
A business line of credit allows you to withdraw any amount of money, up to a certain agreed-upon limit, as an when you require. You will only need to pay interest and repay the amount which you actually withdraw. The main feature of a business line of credit is that there is no fixed repayment schedule, and you can pay back the amounts which you have withdrawn as and when you can.
Businesses of all types and sizes can avail a business line of credit. A business line of credit is most suited for businesses which need intermittent funding for meeting unexpected costs.
Merchant Cash Advance
A merchant cash advance is a type of loan which allows you to access funding against future debit or credit card sales. If your business involves lots of payments through debit or credit cards, then a merchant cash advance may be the right type of loan for your business. You can repay a merchant cash advance on a daily basis according to the sales your business makes on the day.
Any business can avail a merchant cash advance if it accepts debit or credit card payments from its customers. It is most suited for those that have daily sales which fluctuate, and can be used to pay off the loan. A merchant cash advance offers you greater flexibility than a traditional loan.
It is always best to comprehensively research the types of loans for which you are eligible. Before taking any loan, always read the terms and conditions of the loan and see if they are acceptable to you. Borrow wisely and grow your business.