Few people have the capital to start a business and have to resort to small business start-up loans if they are going to make their business a reality. One of the most popular ways of financing a business is through unsecured business loans. There are many different types available if you know where to find them.
Difference Between Secured and Unsecured
What do we mean by a secured versus unsecured loan? A secured loan is one that has something to back it up in case the loan defaults. For example, a car loan uses your automobile as collateral. If you don’t make payments, then the bank can take your car and sell it to make up the money you owe.
An unsecured loan does not have that. There is nothing to back it up in case you default. This is the most beneficial to the borrower, but provides a big risk for the lender.
Finding an Unsecured Business Loan
There are a few types of unsecured loans available, but not all of them are a good idea unless you’re desperate for the money.
- Credit Cards – Credit cards are a common way for people to purchase things and not just for businesses. Credit cards let you buy inventory, equipment, etc. depending on your credit limit, but they also have very high interest rates if you don’t pay them off right away.
- Personal Loans – If you’ve got great credit, then you can try to get a personal loan from a bank. Unsecured personal loans are a big risk for the bank, but it’s probably the best choice for you.
- Payday Loans – These are very high-interest loans that provide you money, but it has to be paid back within a short period of time and with hefty interest. Payday lenders are also notorious for aggressive collection practices. These should only be used as your absolute last resort.
- Corporate Bonds – These are bonds issued by corporations and sold to investors. Repayment usually comes from profits from the business.
Find your perfect loan today. Call us at 888-788-6456 or fill out our online form to start the funding process.