Capital or funds are an integral component of any business. It enables you to meet various business requirements like working capital needs, purchase of any equipment, raw material, business expansion plans and payment of salary/wages, etc. Many businesses find it difficult during initial times to scale up or manage their expenses. That’s where unsecured business loans come in, especially in the case of small businesses who are cash-strapped and do not have much liquidity.
For small businesses, unsecured business loans help in maintaining solvency. Whether you are a manufacturer, trader, distributor or ecommerce business owner, you can opt for unsecured business loans to maintain your working capital needs.
An unsecured business loan is a type of finance that is availed without any security or pledging of assets as security. Of course the amount of loan depends on the credit score and size of the business. They are referred to as unsecured loans because they are offered without security and the lender cannot seize the property of the borrower to recover the amount in case of default.
Get Funding to Grow their Business – Most banks and NBFCs don’t want to lend to small businesses. Firstly, the risk is higher as profitability and in turn repayment is doubtful. Secondly in cases where the banks are ready to give loans to small businesses, they ask for a collateral or security which most small businesses are not in a position to pledge. Therefore unsecured business loan from fin-tech companies come to the rescue here enabling small businesses to avail much-needed funding to grow their business.
Timely Access to Funds – A major advantage that fin-tech companies have over NBFCs and banks is hassle-free and quick loan processing. Usually when you go for loan through a bank or NBFC, the processing time is long and involves a lot of paperwork. Unsecured loans from fin-tech companies enable small businesses to get funds as and when they need them.
Working Capital – Most SMEs are hard-pressed for funds. They often find it difficult to pay creditors, pay service charges, wages, buy raw material, etc. Unsecured business loans can help SMEs meet their working capital needs easily without worry.
Flexibility of Use – Generally when you take a business loan, you have to specify the purpose and use the funds for that purpose only. For instance if you mention business expansion as a reason, you have to use the loan for that purpose only. That is not the case with unsecured business loans. You are free to use the funds whichever way you like, be it marketing, business expansion, to buy some equipment or simply to tide through a difficult period.
So if you have just started a new venture and are in need of funds to fuel its growth plans, unsecured business loans help you meet you requirement with ease without having to tie your personal or business assets.