What are the best options for an unsecured loan for your small business?
Many people are reluctant to use their home as security for a business loan. There are good reasons to be reluctant, for example, not having enough equity, wanting to keep your business and personal assets separate, being afraid of your business failing, or because your spouse or partner is opposed to it. And these are good reasons that an unsecured loan may suit you best.
The team at FundingPro has access to a panel of more than 70 lenders that offer a variety of business loans that will not require you to put your house up as security. We know how hard it is for deserving small and medium-sized businesses to get the funding they need to expand their business. We are dedicated to helping you get the loan you need that best suits your business.
1. Short-term unsecured loans
The main type of unsecured business loan is a short-term one with terms ranging from 1 to 12 months. Short-term unsecured business loans can range from $5,000 to $400,000. The amount your business will qualify for will be based on your average monthly cashflows.
In order to access this type of loan, you will need to be able to demonstrate that your business has a healthy, stable cashflow that will allow you to make the weekly loan repayments.
Are you interested in how much you can borrow under this option, and the weekly repayments required? Try out our handy business loan calculator.
2. Equipment finance
Another option for obtaining an unsecured loan is for the purchase of new or used equipment. This loan is particularly useful for businesses that use equipment such as heavy machinery, vehicles, computers, or catering equipment to bring in earnings.
FundingPro can arrange finance for many types of equipment. The loan term will depend on the useful life of the equipment being purchased. Loan terms of 3 to 7 years are the most common but can extend to 10 years for equipment that holds its value over time.
Equipment finance can come in the form of loans or leases. The most common type of equipment finance is structured as a chattel-mortgage. You will own the equipment from day one, and when you make the final payment the lender will release the mortgage over the equipment.
The amount of the finance will depend on the value of the equipment you want to purchase. You can finance up to 100% of the value of the equipment; in other words, you do not require a deposit.
For equipment purchases under $200,000, company financial statements are normally not required. You can receive equipment finance in as little as two business days.
Would you like to know more about Equipment Finance?
3. Invoice finance
Invoice finance, also known as debtor finance, allows you to use unpaid invoices from your customers or clients as security to borrow money for your business. The main requirement is that your customers are other businesses and that you only issue invoices after you have completed work.
There are two main types of invoice finance: invoice factoring and invoice discounting. With invoice factoring, you have to finance all your invoices. With invoice discounting, you can pick and choose which invoice you finance.
There is no limit to the size of an invoice finance facility. The amount of finance will depend on the amount of outstanding invoices your company holds. After you have been approved for invoice finance, you can draw down funds on your invoices on a regular basis.
Are you interested in learning more about Invoice Finance?
4. Trade finance
Trade finance is used as a way to pay your suppliers. It can be used for both domestic and international trade.
Typically, your lender would pay your suppliers directly for approved goods and services and then you repay the lender over 60 to 120 days.
If your business is eligible, you can borrow from $50,000 to over $5,000,000. The amount is based on your company’s ability to demonstrate strong financials and high-quality cashflows.
Would you like to learn more about Trade Finance?
The best type of unsecured loan for your business will depend on the strength of your financial statements, how much you want to borrow and what you want to use the funds for.
Interested in learning more about which unsecured business loan option is best for you? Make an enquiry and a FundingPro expert will contact you directly to discuss your options.
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