FUEL YOUR BUSINESS GROWTH WITH UNSECURED BUSINESS LOANS

Introduction

Every business wants to grow fast, but that heavily depends on funds availability besides other factors. When businesses need funds, they usually turn to the various loan products available in the market. However, loan-related decisions may not be that easy to make. While personal loans charge heavy interest rates, secured loans demand collateral to reduce the lender’s risk factor. Any business owner who is just starting with most of the cash reserve gone in establishing the firm or who is already struggling to break even can hardly gather the courage to put a valuable asset on the line. But, why do that when there is an easier way out called unsecured business loans?

Unsecured business loans do not require any collateral and help businesses resolve their immediate capital requirements such as purchasing equipment, paying staff, asset maintenance, expansion etc. 
 

What are unsecured loans?

It is a type of loan that requires no collateral. The word ‘unsecured’ here is simply used to denote how it is a risky affair for the lender to lend capital without keeping any asset of the borrower to recover money in case of a default. An unsecured loan is issued based on a borrower’s creditworthiness and business potential to generate revenue in months to come.  

 Also Read: 5 Features That Make Unsecured Business Loans Favourable for Your Business

How unsecured loans can fuel your business growth?

 

1. Meet short-term fund requirements

A major reason why these loans are a hit among business owners is that they help them take care of their urgent capital needs. Also, unlike traditional loans, they give the freedom to the borrower to use the funds as per their preferences. The loan approval process is both easy and quick.  You can use it to purchase equipment, pay or hire staff, for renovation and maintenance, or even for the expansion and launch of new products.
 

1. Improve your credit score and eligibility

You are eligible for unsecured loans even if you have a not-so-good credit score as lenders judge the business’ profitability, business transaction trail and other financial aspects. But the icing on the cake is that these loans help you improve your credit score and eligibility. If you repay all instalments on time, the improved credit history will make you eligible for a bigger amount next time with lowered interest rates.  
 

1. Maintain positive cash flow for your business

In business, payments from customers often get delayed and that’s no reason to pick a quarrel with a valued customer or put all operations on halt till cheques are cleared. Unsecured business loans give the financial cover in these phases. They make sure the continuity of the production gives the owner the comfort of paying off the loan when payments come through. They also act as a cash buffer for all kinds of operational expenses and thus, help maintain positive cash flow.
 

1. Flexible terms of payment

These loans are extremely business-friendly and are the reason why so many enterprises are running successfully, generating both revenue and employment opportunities. What makes so many business owners opt for these loans is that they offer flexible EMI options, allowing the borrower a better chance of paying instalments according to his/her convenience. Though both the loan amount and the interest rates depend on various factors, they are mostly negotiable. Increasing their popularity are the facilities such as low processing fees and pre-payment charges, auto-renewal of loan amount upon repayment, and no hidden costs. With the whole processing, documentation and then verification process done in a jiffy and that too in a hassle-free manner, they save valuable time and energy. 
 

1. Multiple usages

If you require business loans for growth, you are making excellent use of them. Until you are utilising it for a business purpose, financial institutions do not place any restriction on its usage. You can use a small business loan for inventory purchase, new equipment installation, marketing, staff hiring and training, and more. In addition, lenders offer different types of unsecured business loans for various business needs. In other words, business growth loans come in a customised form to meet every business’s needs. 

              Also Read: How Unsecured Business Loans Help in Growth of SMEs

How to utilise the unsecured business loan for MSME like a pro?

 
Business requirements are ever-changing and dynamic. You must be financially prepared to deal with any type of uncertainty that may arise. Here are some tips following which you can utilise small business loans with no collateral like a pro. 
 

Maintain separate account

 
Never put your business growth loan funds and day-to-day cash inflows in the same bank account. By following this tip, you can easily refrain from making unnecessary business expenses. You can also avoid a situation where your unnecessary daily spending depletes your available loan balance, leaving you with little to invest in your firm.
 

Avoid spending at one go

Whether you are a business owner or a regular salaried employee, when a large sum of money arrives in our accounts, our excitement might lead to unnecessary spending. This is, however, one of the most common blunders made by many business entrepreneurs. Having spare small business loan funds in your account allows you to invest in fresh business opportunities.
 
  Also Read: Misconceptions About Unsecured Business Loans
 

Maintain a healthy relationship with your lender

 
When you are having trouble getting funding for your business, experts recommend knocking on the door of an existing lender. If you pay your EMIs on time, the most you can expect from your lender is a top-up loan on your existing business loan or a low-interest rate on future loans. Furthermore, a positive relationship with your lender may be advantageous in difficult times when you are unable to pay your debts on time and need to reschedule your loan terms. 
 
Unsecured Business Loan is helping many businesses grow. Especially if someone is looking to get funds to finance short-term needs on an immediate basis and has no assets to use as collateral, an unsecured business loan is what can bail him/her out. Its various features, as mentioned above, make it a hit among business owners, who would otherwise face the risk of shutting down their operations or keep running from pillar to post in search of funding.
 
Disclaimer: This post was first published on 23 April 2019 and has been updated for the latest information, freshness, and accuracy.