Business leaders need the flexibility and security of reliable small business funding options in order to pursue opportunities to allow the business to flourish. But often, traditional lenders and banks can present a fairly high barrier to entry for small business owners’ capital needs.
More and more frequently, small business owners are turning to non-bank lenders to obtain unsecured small business loans and other forms of unsecured business funding.
Traditional Small Business Funding with Collateral
The first line of small business funding options that most small business owners will encounter are typically found through banks and traditional lenders. Until recent decades, these types of lenders dominated the market, and in many cases were the only game in town.
But traditional lenders and banks are not the easiest to deal with, and many small business owners have found it difficult to obtain small business loans and other forms of small business funding.
Specifically, banks and traditional lenders are very risk-averse. They typically have fairly high-level requirements for most of their small business funding products, such as significant time-in-business, revenue, and credit score requirements, among others.
Perhaps most importantly, traditional small business funding from these sources usually requires collateral. This means small business owners have to put up property, equipment, assets, or even personal assets like their home or vehicle(s), in order to qualify for the loan.
This serves as the guarantee for the bank or financial institution that they will recoup their money, even if the small business fails. Collateral-backed loans and credit products are known as “secured”, as the repayment is secured by the collateralized asset.
Secured small business loans and sources of credit are less risk for banks and financial institutions. As such, they typically have somewhat lower interest rates than their unsecured business funding counterparts.
However, for small business owners, the trade-off here is significant. You are risking a loss of company or personal assets, sometimes significant assets like your own home, if the business fails. This risk may be too large for many fledgling business owners to take.
But it also isn’t the only way to fund your small business.
Unsecured Small Business Loans = Business Loans Without Collateral
Unsecured small business loans and unsecured business funding options are great choices for small business owners in need of funding.
They have no collateral requirements, meaning the financial risk to the business owner is far less than in traditional, secured loan and credit products.
The trade-off here is that since the risk is higher for the unsecured business lending company, the interest rates on the loans or credit lines are typically a bit higher than secured equivalents. For most small business owners, the trade-off is well worth it.
If the worst happens, and the business fails, unsecured business loans and unsecured business funding options won’t result in the owner losing their homes, cars, or other personal property – or even their business property.
If the business is liquidated, bankrupt, or otherwise compromised, unsecured business lending companies will simply be a creditor who need to be dealt with as part of the closing process, rather than entitled to offices, equipment, and so on from the business.
The majority of small business owners prefer business loans without collateral for that reason. Paying a bit more, in exchange for limiting personal and business risk, is usually an attractive proposition for the majority of small business owners looking for small business funding.
Unsecured Small Business Funding Options
There are numerous types of unsecured business funding options available on the market today. Various non-bank lenders, such as BizFly Funding, offer a full range of unsecured business loans and credit products.
These typically each have their variable pros and cons, and some are more well-suited to certain business needs than others. The requirements for each also tend to vary somewhat – though being unsecured small business loans and credit products, they never require collateral.
In brief, some of the unsecured business loans and credit options available from companies like BizFly Funding include:
- Business line of credit, which provides a facility similar to a credit card, where you borrow only what you need, repay it over time, and can then borrow again, up to a pre-defined borrowing limit.
- Unsecured small business loans, which are traditional lump-sum loan products providing up-front capital and repayment over time.
- Debt consolidation loans, to help consolidate debt into a single loan, reducing servicing fees, complexity, and typically lowering interest payments as well.
- Short-term small business loans, which provide shorter-term funding for things like purchase orders/inventory and cash flow management between time of goods or service purchase to the time you are paid by your customers.
- Small business loans for bad credit customers, providing access to funding and credit even for those businesses with bad credit, who may have nowhere else to turn.
- Small business loans for women and women-owned businesses, providing access to capital for this traditionally underserved group.
- Merchant cash advances, which provide lump-sum funding in exchange for a portion of future credit card receipts, with an entirely automated repayment process and variable repayment based on total receipts (rather than a fixed time schedule), which can be an ideal option for many sales-based businesses.
About BizFly Funding
BizFly Funding is a respected non-bank lender, focusing on unsecured small business lending in the US.
Small business funding from BizFly Funding is generally easier to obtain than from traditional lenders and banks, with relatively low credit score, revenue, and time-in-business requirements.
The goal of BizFly Funding is to make obtaining small business funding easy and fast, with an online application process, a full range of choices, outstanding customer service, and competitive rates.
Most businesses who seek unsecured business loans and other funding products from BizFly Funding can receive their funds in as little as 1 business day.