Business lenders offering unsecured business loans are growing fast. Here’s why;
Unsecured business loans can be the quickest and easiest way for small business owners to get their hands on small to moderate sums of money.
More business owners than ever before are opting for unsecured business loans, and there are some important reasons why.
Bill Baker, CEO of Lend explains; “Unlike most secured loans (think mortgages), unsecured business loans tend to be short-to-medium term funding – generally repaid between 6 and 12 (sometimes 18) months. Most lenders offer maximum loans of up to $250,000, although some will offer up to $500,000 to larger business borrowers. Most loans are around $30,000.”
Over the past decade, a whole new lending sector has arrived in Australia: FinTech. There are now scores of online lenders, focused wholly on serving the SME market.
Unlike traditional lenders, they are flexible and willing to take some risks, which means that small businesses that have struggled to access finance in the past now have somewhere to turn for the capital they need.
While online lenders offer all sorts of funding options, unsecured business loans are the most common, straightforward and readily available option.
In today’s market, there are many lenders competing for your business – and that’s always good news for the borrower. While rates will always be tied to overarching economic conditions, you’re sure to get the best deal when there are multiple lenders in the same space.
And now there are more lenders than ever.
Most unsecured business loans come with fixed rates or factor rates, which means there will be no surprises. You’ll always know how much you’ll be expected to pay and when you’ll need to make payments.
Unsecured loans with factor rates tend not to carry early repayment penalties, since the full cost is calculated up-front. This means that you won’t have to worry about being locked into finance you no longer need.
There are certainly times when a secured loan may make sense, especially if you need long-term finance.
But with a secured loan, you stand to lose the asset if you cannot repay your loan, which could have severe consequences for your business or even your personal life (depending on what you offer as security).
Lenders have the right to sell the asset if you are unable to repay your loan, so secured loans are much lower risk for them. That’s why you’ll generally get better rates with a secured loan – and why traditional lenders almost always require security.
But if you simply don’t have assets to offer, or don’t want to put what you own on the line, an unsecured loan could be the answer to your cashflow needs.
You’ll be relieved to hear that applying for an unsecured business loan is nothing like applying for a bank loan. In most cases, you’ll be able to complete the application process within ten minutes, as long as you have your supporting documents to hand.
Those supporting documents won’t be anything like a bank’s requirements, either. What FinTech lenders need to know is:
- whether you’re an established business rather than a start-up (have been trading for at least 6 months)
- and, most importantly, whether you have the capacity to repay your loan.
That means they’ll mostly want to see your ID document and bank statements. Many lenders will request you to connect to your bank via a third party service to provide your business bank statements, which makes it really easy for them to assess your financial situation. Don’t worry, the service will be secure, and they won’t be able to make any transactions.
Once you’ve submitted your application for an unsecured business loan the assessment should be quick and easy. You could have an answer almost instantly, and funds in your account within a day or two if your application is approved.
The rise in popularity of unsecured business loans is mostly due to the emergence of Australia’s thriving FinTech lending market.
These businesses cater specifically to the needs of SMEs, filling the huge void left by the big banks. Business owners often don’t have assets to offer as security for a loan – and want fast, easy, and hassle-free access to business finance.
Of course, before entering in to any finance contract, you should seek independent expert advice.
Cigno Business Solutions is all about giving Australian business owners the means to survive, grow, and thrive. CBS understands that in business, speed and practicality are always crucial.
CBS have tailored their loans to suit business owners that need funds as soon as possible. No complicated processes, no long waits, just a straightforward application you can complete online at your own convenience.
Have an urgent need for a business loan right now? Get in touch with CBS today and they’ll be more than happy to help! Apply here!