Unsecured Business Loan
A secured business loan is granted with an asset placed in a security deposit, for if and when things don’t work out, the lender can dissolve those assets and recoup the loan amount.
Unsecured Business Loans are the complete opposite of traditional Business loans. It is a great funding option for fast-growing companies that require immediate finance.
These types of business loans are granted without having to put up your assets in a security deposit. It’s ideal for startups who don’t own any viable assets to pass the secured business loan screening process.
The fast finance benefit is the reason many businesses opt for Unsecured Business Loans when they’re in a crunch for financial aid.
Benefits of loans without backup security:
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No Intensive & Lengthy Legal Process
All financial institutions do a very thorough legal inspection before lending loans. The screening process can get very lengthy, especially for larger amounts. And when the collateral is submitted, the lender examines its value closely which can take months to pass.
However, with Unsecured Business Loans, the lender does factor in the repaying strengths of the receiver, but the process is usually complete in a matter of days. Sometimes as soon as under 24 hours after application.
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No Collateral Required
Many startups and newbies in need of financial aid get rejected due to the lack of valuable collateral assets. With Unsecured Business Loans, you don’t necessarily need a collateral asset to pass the loan. However, other factors are taken into consideration by the lender before passing the loan. Such as future business plans, Loan repaying plans, etcetera. A personal guarantee is used as collateral for an Unsecured Business Loan.
A personal guarantee is a legal document you sign making you liable to the law. Giving the lender a legal right to pursue your assets if you fail to repay the loan.
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No-Risk Of Losing Assets
There are very tight and specific terms on who can get a secured business loan. Protected by very valuable assets. In any case, you fail to repay the loan, any assets defaulted to the lender will be awarded as collateral.
With Unsecured Business Loans, the lender would need to go to court to seize any assets for collateral damage. And if the receiver files for bankruptcy, the court may discharge the Unsecured Business Loan.
