When you’re running a business, there’s one thing that’s undeniable: You need capital.
And if that capital isn’t flowing like it should, there are a few things you could do.
The most conservative approach would be to cut back on expenses. But when you cut back on expenses, you’re also hindering growth. In some cases, this may be okay for a time. Just be sure to weigh the pros and cons of stunting your business growth before you make this call.
If you choose growth, a business loan is your next natural decision.
Once you’ve made this decision, you need to consider which loan. There are various types of finance options for SME’s but the most popular product is an unsecured business loan.
The average unsecured business loan is around $30,000, however you could borrow between $5,000 and $300,000. Typically you would repay this amount within a year.
And the best thing, there are no restrictions on how you use this money for your business.
So why are unsecured business loans so popular?
We’ve seen such as surge in the growth of this type of lending because there is so much demand.
Banks are increasingly cautious about lending to small businesses, even more so since the Royal Commission, but the Australian FinTech market is thriving and there are scores of online lenders who have built their businesses specifically to meet the needs of SMEs.
If you have been in business for six months or more and you can show you have the capacity to service an unsecured loan, you can expect to find it relatively easy to get the cash you need.
2. Lack of collateral
With secured loans, you must put up some sort of collateral. And that means you risk losing the asset if you ever find yourself in a position where you can’t pay off your loan. (assuming you actually have any assets to offer as security, which many SME owners don’t).
Unsecured business loans aren’t attached to any collateral assets, so the major risk is to your business credit.
Note: On occasion a lender may request security to alleviate the risk of lending money to your business if your current cash flow isn’t as strong as it needs to be. This could be in the form of a piece of business machinery or even a car.
3. Fixed repayment terms
With an unsecured loan, the terms are clearly defined. When you accept the loan, you’ll do so with full knowledge of when you must make payments and whether there are any prepayment penalties.
If you don’t know these things, don’t sign on the dotted line until you’re sure. Read the agreement.
4. Quick and easy application
Bill Baker, Co-Founder of Lend says “One of the great things about Business Fuel is the simplicity of getting approved. Simply apply online and upload your bank statements and Business Fuel can provide you with a same-day approval. You can get back to running and growing your business sooner.”
It’s because of this simplicity, when compared to the onerous applications and supporting information that traditional banks require, that makes online business lenders much more attractive to a time poor business owner.
Most unsecured business lenders will respond to an application within a day or even hours, and if your application is approved the funds could be transferred to you just as quickly.
Many SMEs simply don’t have security to offer, so an unsecured business loan may be an obvious choice.
But there are many more reasons why unsecured business loans are becoming increasingly popular, even with businesses that could qualify for a traditional bank loan. Speed, ease, transparency and complete lack of hassle being among them.