Unsecured business loans

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11

May

Unsecured business loans

posted by: Jason Hulott

Your business may need to borrow money for any number of reasons. The type of business loan you choose is likely to reflect your underlying need for access to such external funding, and this falls into one of two broad categories:

Secured loans

  • where your need is for a substantial investment – for the purchase of new company headquarters, a complete refit of plant and machinery or the acquisition of a rival business, for example – the scale of the necessary borrowing is almost certain to require a relatively lengthy repayment schedule;
  • over the course of the loan – which may extend for ten years or more – interest rates may vary, so that the eventual total cost of the borrowing is likely to be more difficult to track and to monitor;
  • to safeguard against the risk of your defaulting on those repayments, your lender is likely to require some form of security – assets of your business which the lender may repossess if you fail to make the necessary repayments or to make them on time;
  • as a further safeguard, the lender may also look to test the business case for your taking on such a loan by requesting a detailed business plan and by making a thorough examination of your company accounts;
  • all of this takes time to arrange, of course, so a secured business loan may take weeks or months to obtain, while the lender seeks the desired level of security against the risk of advancing the funds to your business;

Unsecured business loans

  • your borrowing requirement might be of a quite different order – requiring a smaller amount, over a shorter repayment period, with a known and fixed rate of interest;
  • for these purposes, unsecured business loans are likely to provide the solution;
  • unsecured business loans may also be used for a wide range of purposes – such as an addition to your immediate working capital to meet current cashflow demands, your ongoing need to meet VAT liabilities or annual tax demands, the upgrading of office equipment or IT systems, or the funding to clear accumulated debts or overdrafts;
  • an unsecured business loan arranged by ourselves here at Cubefunder may provide the answer you require;
  • in contrast to all the safeguards that need to be put in place for a secured loan, an unsecured loan is just that – unsecured against any of your company assets and, therefore, incurs considerably less risk;
  • but that is not the only advantage – an unsecured business loan typically requires no detailed business plan or statement of your company accounts;
  • it is repaid over a much shorter borrowing period (usually less than 12 months);
  • it attracts a fixed rate of interest (so the cost of monthly repayments are known from the start); and
  • the entire application process – from initial enquiry to the delivery of the requested funds to your company bank account – is likely to take just a matter of days, rather than weeks or months.

At Cubefunder, we offer unsecured, fixed rate, short-term business loans of up to £100,000 – but for the majority of our borrowers, sums of £50,000 or less suit their purposes for this type of borrowing.