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Unsecured Small Business Loans

LEARN MORE IN OUR BIZFLY UNSECURED SMALL BUSINESS LOANS GUIDE BELOW​

Unsecured small business loans are a perfect form of financing for small business owners, with limited assets, and therefore an inability to put up collateral for a traditional loan. They can provide immediate funding, have a relatively low threshold for qualification, and can be structured for an amount and repayment period that makes the most sense for your business needs.

Crucially, because they are unsecured, and typically have a low minimum credit score requirement, they can be one of the best and most accessible forms of funding for those with bad credit.

Unsecured small business loans with bad credit can have the additional benefit of helping to drastically improve a business’ credit score over the long-term, increasing access to capital or improving interest rates for future loan activities.

Unsecured Small Business Loan Guide

What Are Unsecured Business Loans?

Unsecured small business loans are a form of business loan, that may be short or medium term, and provides up-front lump-sum funds to businesses for them to use as they see fit. Crucially, the “unsecured” portion of the name defines that the loan does not have any collateral requirements.

This can be advantageous for new or smaller businesses that don’t have considerable assets to put up for a loan, or who do not wish to risk those assets in exchange for business funding.

The downside is this means borrowers typically pay a higher interest rate than on a collateralized or secured loan (though it is still relatively low compared to other forms of business credit available, especially for those who have a poor credit score or limited credit history).

Is an Unsecured Small Business Loan Right for My Business?

The requirements for an unsecured small business loan are fairly generous, stipulating a relatively low time in business, fairly low minimum credit score, and fairly modest minimum monthly revenues. 

If you don’t have assets, or don’t wish to risk assets, to obtain funding from a traditional business loan, or your credit score or credit history are too limited to qualify, then an unsecured small business loan may be a perfect choice to help finance and grow your business.

Ultimately, like all financial decisions, you’ll have to weigh the pros and cons, and look at your options, to determine if an unsecured small business loan is the best choice for you and your unique situation.

What Will Business Financing Through an Unsecured Business Loan Cost?

A critical question for all business-oriented customers is, “What will this cost me?” and it’s no different with an unsecured business loan. The exact cost will vary depending on factors such as your time in business, credit score, revenue, how much you borrow, and over what term you agree to repayment.

Put in broad terms, however, these loans tend to cost more than a traditional (collateralized/secured) business loan, but less than loans targeted to the extreme low end of credit scores.

An average interest rate in the range of 20-30% is not unusual, meaning that for every $100,000 borrowed, you will typically have to pay around $25,000 in interest charges. Perhaps far more important than the basic cost is to ask what other options you have in terms of business financing.

Often, an unsecured business loan may be the most financially viable option to fund your operations, expenses, and projects, to receive funding now without putting up homes, property, equipment, and other assets for collateral.

How Do I Qualify for an Unsecured Small Business Loan?

Like most of the loan products from BizFly Funding, there are only a few basic requirements in order to qualify for the loan. While no lender can guarantee approval, so long as you meet the basic minimum requirements, your application has a good chance of resulting in funds for your business.

The basic minimum requirements for an unsecured small business loan at BizFly Funding include:

What Are the Main Uses of Unsecured Small Business Loans?

Unsecured business loans, like most of the loan products we offer, can be used as you see fit, to pay for business projects and activities that you deem necessary, without restrictions.

However, given the nature and interest rates of the loans, some financing activities comprise more common uses for unsecured small business loans than others.

Some of the uses that our clients report for their unsecured small business loan funds include:

How Do I Apply for an Unsecured Small Business Loan With Bizfly Funding?

With BizFly Funding, you can apply for an unsecured small business loan, through our website, in a very simple, quick, and easy process. Pre-approval can be received in as little as 30 minutes, and it will not affect your credit score.

Step 1: Apply
Step 2: Get Approved

As soon as this is submitted completely, it will be submitted to our underwriters and our Funding Specialist will contact you with a few offers to choose from. 

Get an approval within hours after your application is processed.

Step 3: Get Funded

Unsecured Small Business Loan Recap

For many businesses, unsecured small business loans can be an ideal form of funding. This is especially true when limited credit history or poor credit scores exist – unsecured small business loans with bad credit can often be the only kind of capital or financing available.

The requirements are relatively low, and no collateral is required, which makes these loans extremely valuable for many small businesses, who may not have (or wish to risk) assets as collateral for a loan.

If you have additional questions about an unsecured small business loan from BizFly Funding, need more information, or help with your loan application, our support team is more than happy to assist you!

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Unsecured Small Business Loan FAQ’S

There is a possibility of extending the loan period, however, it depends on several factors. Speak with your loan advisor.

This depends on whether it was personal or business, and how long ago the bankruptcy was filed.

A minimum of six months in business is required for our unsecured financing.

We take pride in the privacy we offer, we never sell your information to anyone.

There have been cases where borrowers got funded within a few days after they submitted an application. It just depends on how prepared the applicant is with their documents as well as several other factors.

It is basically stating that you did not lie on your application, and that you agree to pay back the loan according to the terms in the contract. There are many different types of personal guarantees so be sure to read what your liability may be in the case of default.

There are no restrictions on how you use the money.

Yes. You may be eligible for better rates and terms by having a better credit profile. However, by being approved and paying off your unsecured business loan on time- you will increase your credit as you would with any traditional loan.

Too often, their own lifeblood – capital – is difficult or impossible to come by. Small businesses are risky, and many banks and traditional financial institutions are hesitant to lend to small businesses.

Unsecured small business loans from non-bank lenders can be the answer that many small businesses need to not only survive, but to thrive. But what, exactly, are unsecured small business loans? What is unsecured business funding? 

What are the advantages and disadvantages of this kind of small business funding? For entrepreneurs, these are important questions, which we’ll answer in our guide to unsecured small business loans below.

Unsecured Small Business Loans are Business Loans Without Collateral Requirements

First, we need to discuss what the terms “secured” and “unsecured” mean in the context of finance and lending.

Many people who are unfamiliar with them often think, at first glance, that they have something to do with the legitimacy or safety of a loan or credit product, and that secured are somehow better or safer choices than unsecured. This isn’t true at all.

no collateral

The only aspect of “security” that’s involved is how “secure” the investment is for the lender. Specifically, how assured they are that they will get their principal and any interest owed back to them from a particular loan or credit product.

In the most general terms, secured products are those that are backed by collateral. A secured loan or credit line usually requires a borrower to put up collateral assets – vehicles, property, equipment, and so on – valued well in excess of the amount to be borrowed. 

This secures the loan for the lender. If the borrower goes bankrupt or otherwise fails to repay the loan, the lender can seize the collateral assets, and then sell them on the open market, thus recouping the money owed to them.

Unsecured business funding options, by contrast, do not have any collateral requirements. This makes them more risky for the lender, since there is less guarantee of repayment if the borrower defaults on the loan.

 

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Business loans without collateral requirements are often much preferred by borrowers, however, for the reasons we’ll get into in the next section of this guide. 

This is especially true when you are a small business with relatively few assets that you could risk as collateral, even if you were so inclined to take that risk as a borrower. 

In either case, there are tradeoffs between the advantages for the borrower and the lender when you choose either a secured or unsecured business funding product. 

Some lenders deal exclusively in secured products, others exclusively in unsecured products, and still, others offer both. 

There generally are more rules and regulations on lending with banks and financial institutions, and they are more likely to only offer secured products, than in the case of private, non-bank lenders.

For these reasons and others that hinder accessibility to vital capital, many small business owners and entrepreneurs in a broad cross-section of industries and sectors turn to private, non-bank lenders focused on unsecured business lending as their first choice for small business funding. 

Unsecured small business loans are just one of these kinds of products available from non-bank, alternative lenders in the modern small business funding world.

Advantages of Unsecured Small Business Funding vs. Secured Funding

As mentioned above, there are many advantages to unsecured small business loans from the standpoint of the borrower, which is why they are often so preferred over secured loans for small business owners. 

Advantages of Unsecured Small Business Funding vs. Secured Funding

There are of course some drawbacks, too, which we’ll touch on in the next section.

In general, though, most financial experts would advise that unsecured small business loans are definitely a lower risk for borrowers than their secured counterparts. Reasons for this include:

Disadvantages of Unsecured Small Business Funding vs. Secured Funding

Naturally, there can be no pros or benefits without some cons or drawbacks. Unsecured business funding is a great choice for borrowers because it represents a lower risk. 

However, this comes with an attendant increase in risk for the lender, which obviously means there are higher costs for borrowers when it comes to unsecured small business loans.

Disadvantages of Unsecured Small Business Funding vs. Secured Funding

Typically, this is in the form of a higher interest rate. Small business loans secured by collateral may have interest rates that are around half of what you’ll pay for an unsecured small business loan of the same amount. 

However, much of this “disadvantage” disappears if you factor in the potential cost of losing highly-valued collateral.

For example, a secured loan for $10,000 with $30,000 in collateral, at an interest rate of 5% APR, lasting for one year, will mean you’ve repaid $10,500 if all goes well, and lost $19,500 net if you default. 

An unsecured small business loan for $10,000 with $0 collateral may have a 10% interest rate by contrast, meaning you will have repaid $11,000 if all goes well, and only owe $11,000 (less any payments you’ve already made) if you default.

In a worst-case scenario, you’ll save nearly $20k by paying $500 more in interest payments for an unsecured small business loan. 

For most small business owners, this slight upcharge is well worth the reduced risk for catastrophic loss of collateral. The only other drawback of unsecured small business loans that can sometimes exist is that the overall total loan amounts available may be lower than with a secured loan.

This really depends on the lender, and the financials of the business. In practical terms, many small businesses don’t need millions of dollars in loans, and could not support them, with collateral or otherwise. 

Therefore, most unsecured business lending firms, the non-bank, private lenders, offer more than sufficient upper limits on their unsecured small business loans, and this disadvantage disappears or doesn’t come into play for the vast majority of clients.

Other Unsecured Business Funding Choices

Of course, there are also several different kinds of unsecured business funding products that small business owners can choose from. 

Many also have secured counterparts available from banks or traditional lenders, but may be difficult or impossible for many small businesses to qualify for.

Plan

Alternative, non-bank lenders offer unsecured business funding choices including:

Unsecured Small Business Loans from BizFly Funding

All of the small business funding options discussed in this guide are available from alternative, non-bank lenders like BizFly Funding. BizFly Funding is a private lender that is exclusively focused on providing small business funding solutions. 

They are one of the premiere unsecured business lending firms in the US today. 

To find out more about the qualifications for unsecured small business loans and other products from BizFly Funding, simply visit their website and fill out the online application form at http://bizflyfunding.com.

Frequently Asked Questions about Unsecured Small Business Loans

Exactly what happens when you default on an unsecured small business loan will depend on your loan agreement with the lender. Some will work with you on a new payment schedule or modified loan repayment plan.

If that is unsuccessful, or your company has declared bankruptcy or similar, there may be legal action or referral to a collections agency. 

In all cases, however, you will only be liable for what you have agreed to in the loan agreement, which is never more than the outstanding amount of the principal and interest on the loan (plus any late fees or penalties).

Business loans can be secured or unsecured, depending on the type of loan or credit product, the lender, and the borrower’s qualifications and preferences.

Small business funding options are typically available in either secured or unsecured varieties. 

As discussed in this article, however, most small business owners typically prefer unsecured small business loans or unsecured business funding options, as it reduces their financial risk and exposure.

To qualify for a small business loan or other financing product, you’ll need to meet the minimum requirements, which vary based on lender. 

These typically include income or revenue requirements, time in business requirements, and credit score requirements.

They’ll generally be listed on the unsecured business lender’s website, and disclosed during the application process as well.

Even without a hefty bank account balance, you can generally obtain unsecured small business loans and other unsecured small business funding products.

There are usually revenue or sales requirements that need to be met, however, so these options are not always useful for brand new start-ups, which often benefit the most from venture capital or equity investment to get started.

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