What is an Unsecured Line of Credit Business Loan
The measure of your business is what you do with what you have. To do this successfully, you must take advantage of every possible opportunity. This means learning more about your funding options, such as an unsecured line of business credit loan.
Some business owners make snap judgements about funding issues before they have a complete picture about it. However, it’s unwise to find fault with something that you don’t understand. One choice you might not be familiar with is an unsecured line of credit business loan. Find out more about the pros and cons to discover if it is a good option for your business.
Definition of an Unsecured Line of Credit Business Loan
An unsecure line of credit business loan is a type of revolving loan where you don’t have to pledge collateral. There is a great risk to the funding institution but very little for you.
With this kind of small business loan, you get access to financing with little to no money upfront. The bank or funder gives you a set amount of money that you can draw down from when you need extra cash.
It works similar to a credit card. The biggest charges come only when you actually withdraw the money.
The Advantages of an Unsecured Line of Credit Business Loan
No collateral needed – when a loan is unsecure that means the money is not dependent upon your assets.
No need to continually reapply — as long as you remain in good standing with the lender, the funds become available again after you repay them.
What Are the Disadvantages of an Unsecured Line of Credit Business Loan?
Strict qualifying criteria – the truth is that most small businesses cannot meet the requirements. While no collateral is necessary, other factors are. These include excellent credit and several years’ worth of proof that your business is continuously successful.
You will also need to provide a ton of documentation — this includes (but not limited to) business registration documents, financials, personal and business tax returns and access to your bank accounts.
Yearly review – when you get any kind of quick business loan from a bank, there are many hoops to jump through. For example, they will likely conduct a yearly review of your financial operations. If everything is not perfect, you could lose your funding.
Temptation to misuse – imagine you have a drawer full of cash. How many times, and for what reasons, would you withdraw money? Well, that’s what a line of credit business loan is. You must have a clear strategy for when and how you will use the money. This will help you avoid too many withdrawals and too much debt.
Are There Any Alternatives to an Unsecured Line of Credit Business Loan?
Your ability to access fast capital financing can make or break your business. Finding the best source for small business financing is crucial.
Many small and medium size businesses turn to alternative funding companies, like Financing Solutions (www.financingsolutionsnow.com). They make it fast and easy to get the cash you need to sustain your business.
They give you flexible repayment options and no penalties for early repayment. Even more important, they look beyond the credit score number to make approval decisions. Therefore, even if you have less than perfect credit, you can still be eligible. In fact, more than 90 percent of the businesses that apply receive their quick business funding.