|Business owners have easy and quick access to working capital finance for covering their companies’ short-term operational financing needs.
||Working capital loans are sometimes tied to a business owner’s personal credit, therefore, in case of delayed or missed payments, his or her personal credit score will be negatively affected.
|In the case of an unsecured working capital loan, a company can secure the loan without putting down any collateral.
||Only companies with a high credit rating are eligible for unsecured business loans. Those with a poor credit rating will have to put down asset(s) as collateral to secure working capital finance.
|Unsecured working capital loans allow business owners to maintain control of their companies even when they are in dire need of financing.
||To compensate for credit risks, the borrowers will be charged high-interest rates which is a definite drawback for business owners; as the debt burden increases, the chances of defaulting on payments are higher.