Why Unsecured Business Loans Are A Safer Option For Small Businesses?
An unrestricted flow of working capital is the primary requirement for a small business to maintain its operational and organisational efficiency. Not only does it ensure seamless workflow management but it also makes certain that the business continues to function without any obstacles.
However, at a time when the market is ruled by excessive monetary fluctuations, how should a small business meet its short-term capital needs? What is the best way to obtain quick finance that is both, secure and sustainable? It is precisely in order to address such issues that the provision of unsecured business loans has begun to hold much credence.
Unsecured business loans and financing are essentially collateral-free business loans, which help small business meet all its urgent capital requirements in a swift and safe way. Since they do not require any security or collateral, the small businesses are free to raise an amount as per their specifications, without having to compromise on any structured asset.
Owing to the huge demand of these safe, small business loans, a multitude of lending institutions have come up with a variety of unsecured loan products. This has further increased working capital access while offering customised business solutions. Nevertheless, at this juncture, it becomes extremely important to find out why these loans are considered to be a safe option for most small businesses.
Lower Risk Profile
Fundamentally, being collateral-free, the unsecured mode of finance has an exceptionally low-risk profile. This is primarily because the borrower does not have to place any asset in lien for availing the loan. As most small businesses do not have many valuable assets to offer as security, their risk profile is automatically lowered.
Flexible Criteria & Conditions
Unsecured business loans are replete with flexible eligibility criteria and viable repayment conditions. Most lenders extend these safe, small working capital to small businesses, even if they don’t have a well-developed credit profile. Moreover, they also provide a repayment tenure that ranges from 3 months to 3 years! This ensures that working capital is conveniently arranged and the business’s long-term finance planning does not face any obstruction.
One of the greatest business owners tips, which shifts the scales in favour of collateral-free working capital is that these loans can be used for a variety of different purposes. Unlike secured business loans, you don’t need to delineate the specific intent for which you are taking a loan. Therefore, these loans can as easily be used for investment as for marketing.
Flexible Loan Amount
When you avail a secure loan, the loan amount you will receive would be around 70%-80% of the collateral’s total value. However, with unsecured loans, this amount can be as small as Rs. 50 thousand and as large as Rs. 1 crore! The disbursal of these safe, small working capital is entirely dependent on your particular requirements.
Thereby, as a small business, if you are looking to undertake detailed finance planning, getting an unsecured loan can make your task much easier. This is not merely because they are a safe funding option, but also because they offer a plethora of financial benefits which can help your business expand, grow, and reach the pinnacle of success.
Unsecured working capital can also be taken in the form of invoice discounting wherein SMEs can avail collateral free working capital within 24-72 hours through platforms such as KredX – India’s leading invoice discounting platform. To know more, visit www.kredx.com for further information.