Business loans can be extremely helpful starting, expanding or acquiring a business. Unfortunately, they are not easily accessible to everyone. Depending on the type of business loan that you are after, you may not be in the financial position to secure them. For many business loans, lenders will require security or collateral on the loan. This can come through the form of an asset such as property or motor vehicle. Unfortunately, some business owners may not yet be in the financial position to have their own property.
Lucky for you, there are loan options for business owners that can’t or don’t want to throw their assets in as security. The lenders will simply have to evaluate your business’s strength and will approve your application based on your potential and success. You won’t just need a sound business structure, but also a reasonable credit history and good bank statements.
Who offers business loans without security?
In today’s ever-changing society, you can find these loans at some of the big banks. The main providers of alternative business loans are typically alternative lenders. The fees and rates will obviously vary depending on the institution and type of business loan. For this reason, it is important to do your research and find a trusted and flexible alternative lender.
An alternative lender will be more lenient and relaxed with you in their lending process. For example, if you have some serious cash flow problems or very negative credit history, then an alternative provider may be more likely to offer you a business loan rather than a bank.
Here are some of the main business loans that don’t require security
Lenders will offer several types of business loans that won’t necessarily need security, no matter if it’s the form of a house, a car or anything else. Look through the following options and see which one works best for you.
Unsecured Business Loans
Unsecured business loans do not require long term trading history or security. Lenders will not secure the loan with an asset such as property. Rather they will consider a range of other factors when assessing your loan application. Among many, lenders will look at your credit file to determine whether or not you’ll be able to keep up with repayments. They will assess your overall financial health to determine whether you are a smart borrower. These loans are usually short-term (12-36 months) and are granted to responsible borrowers. Unsecured business loans are typically flexible in nature. Repayments can be periodic and tailored to your individual needs.
Invoice factoring allows you to borrow money against an outstanding invoice and you will have to repay the business loans once the invoices have been honoured by the clients. This method is an easy and quick way to fix the cash flow of your business without bringing out your property as collateral.
Purchase Order Finance
If you are taking out a loan because you have issues with the cash flow, then this loan will be paying your suppliers for you. This type of loan doesn’t demand property as collateral but is granted according to the profile of your business, your order risks, your experience and the reputations of your suppliers and clients.
Trade finance is another business loan that won’t need security. With this loan type, the loan pays your supplier on your behalf. This will allow you to fulfil orders to customers and therefore keep your business operational. The repayment will be made on an agreed-upon period, and the loan is given as a revolving credit line. The lender will be a third party financier in this situation.
If you have any damaged equipment, you can ask for a loan to purchase that equipment. These business loans won’t ask you for collateral. Instead, they’ll take into account your business’s strength and anticipate the cash flow upon the purchase.
As you can see, you don’t have to put your property on the line when opting for these types of business loans. All you will need is decent financial health and the guarantee that your business will be successful thanks to the loan. For further help, you may enquire with us and see what we can offer you. If you are the owner of a company in Australia, then you’ll surely find a quick business loan option that won’t need security.