The Mechanics behind an Unsecured Business Loan

16 October, 2018

Is not uncommon for business owners to experience cash problems at some point of their day-to-day operations, the business accounts are dried out and the credit cards are maxed out, we could put the blame on our clients that delay payments, but the best thing to do is to take action to solve the problem.

Even if you have a steady business operation you could be looking into expansion by building an annex to your main locale or by buying a new prime location that has been on your radar for a long time. Whatever is the case you always go one step forward instead of missing the chance to take action by getting an unsecured business loan.

Type of Unsecured Loans and Limitations of Each one

Many agencies in Australia are willing to offer unsecured business loans that do not require for you to offer any type of assets as collateral, but most of them will be interested in your financial situation. Most lenders grant loans for as little as $1,000 or as high as $1,000,0000 and they can be deposited on your business account in less than 24 hours. Unsecured loans have a very diverse offering since they are usually set to service specific situations given the financial situation of the person or company asking for them.

  • The first one that we can mention is Term loans, these works by offering the requested amount of money upfront. To pay them back the loan agency usually sets up a basic scheme of monthly lumps that will be paid under a negotiated term that can go from 3 months to 15 years.
  • Another type of unsecured financing is short-term loans. They work under the same scheme as the term loans we already explained with the main difference being the shorter payment schedules. These types of loans are usually granted for short amounts of money that go no more high than 5 figures and are covered in a year or less.
  • The third type of loan is known as Overdraft, and it works just in the same way as a line of credit would with a bank, with the main difference being the speed response of the lender providing the money and the limits set upon your withdrawals.
  • The last product is line of credit with a lender, this one allows business owner to borrow as much money as they need and to repay it at negotiated timetables, as you use the money and make deposits to pay back what you owe, you will be able to keep making withdrawals, as long as the relationship turns out beneficial for both parties involved.

How can these Lenders procure Unsecured Loans?

Is really hard to picture someone that is willing to lend money without making sure you will be able to pay them back. Since most lending agencies are really to release money upon request, you must be probably asking what their criteria to pick their clients. While the fierce competition among these services doesn’t allow for high standards most of these lenders make sure to run a quick checkout about your business operation and your ability to pay back your debts by using either a network set between lenders or by looking for direct references from your bank. Their revision doesn’t take much time and it can be handled in less than 24 hours after asking to be granted.

Some of these agencies will straight up ask for this information to you directly. If you take into account the fact that these companies work in very different terms than banks and their approval rate is near to 99% you can work with them even with setback such as bad credit score. Most of the information they request about your business are means of proof about the time you have been on business, if you own the locale of your operation or if it’s a rental, the leasing period in such cases and your credit history.

To evaluate your ability to pay them back they could likely ask about the purpose of the loan, or proof of monthly income generated by your business, as well as a monthly turnover. If you are asking for the maximum amount of money they are able to cover, you will be asked about your assets. Most of this information is attested by them in less than 24 hours if you are eligible, you will receive your grant. You need to be careful though: since these companies are willing to lend money by unsecured means, they are also very capable in the way to use the legal system to make you pay them back if you fall behind by any reason.

As you can see, getting unsecured loans is not really that hard as a business owner, you need to be mindful about it to avoid unplesantries and to make that work you just need discipline with money.

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