Unsecured cash business loans
Apply for as much as your business needs without offering up collateral with an unsecured business cash loan.
Cash flow is an issue for many businesses and fluctuations in monthly income and expenses can have a huge effect on a business’ ability to run.
If you run a business that has many small funding needs, such as covering orders and purchasing stock, you may only need a small amount of cash to see you through. This is where an unsecured business cash loan comes in. You don’t have to borrow $500,000 whenever your business needs funds – only borrow what you need, when you need it.
This is a type of financing that does not require you to attach an asset – whether it be personal or business – as collateral in order to take out the loan. Depending on the lender you select and your average monthly sales, you may be able to access between $1,000 and $100,000 (or more) and have access to the funds quickly.
Businesses apply for these loans to access working capital or to ease cash flow issues. The loans, therefore, can be accessed quickly in order to help address these issues.
- Depending on the lender, businesses can usually apply for a loan of around $100,000 as either a lump sum or a line of credit and have access to it within one business day. Some lenders offer up to one million, however it will likely take longer to receive this amount of money and an asset may have to be offered up as collateral.
- Depending on the loan type you choose, you will either make regular repayments over a specified period of time to repay the loan or you make payments towards the line of credit based on the amount you use.
Compare top online business lenders for unsecured financing
Here are a few things to keep in mind when comparing loans:
- Can my business afford it? Before taking out a loan, this should be at the forefront of your decision. Take a look at the costs that will be involved with the particular lender and ask if it will be manageable with your cash flow over the next few weeks or months. Only you know your business’ financials and what you will be able to afford.
- How much can I borrow? While lenders will offer a minimum and maximum loan amount—usually between $1,000 and $100,000—the loan you are actually approved for will depend on a few different factors. Check to see what they base their loan amount approvals on and if you will be offered the amount you need.
- When will I receive the loan amount? You’ll need to ensure that the lender you choose is able to transfer you the loan amount in the time you need it. Most lenders will be able to have the loan amount in your bank account within a few days, while some are able to transfer it within 24 hours.
- What will my repayments be? Business loans tend to be more flexible than personal loans in that repayments are able to respond to cash flow fluctuations. Check to see if the lender will set out repayment terms before you apply, as most will structure your repayments on a case-by-case basis depending on your business type, cash flow history and projections, as well as the amount you borrow. Loan terms differ between lenders but are usually between three months to one year, sometimes longer.
- What are the fees and charges? Are there upfront fees you need to pay to establish the loan? What about ongoing fees? These, along with interest charges, can have a huge impact on the cost and affordability of the loan, so make sure to compare and find the most competitive offering from lenders.
- Who is the lender? There are some untrustworthy lenders who operate in the online loan space, so remember to check their reputation, read third-party reviews and see how easy they are to contact before you sign for the loan.
There are different types of business loans you can apply for, however you will have to meet certain eligibility criteria. Keep in mind these requirements can vary between lenders.
With some lenders, the following criteria may need to be met in order to qualify:
- You are at least 18 years old, or the age of majority in your province or territory.
- You have been in business for a set minimum duration, which is normally six months to a year.
- You meet the requirement for minimum average monthly sales, which could be between $5,000 to $50,000.
- You have the cash flow to make your loan repayments.
- You offer suitable collateral (if it’s a secured loan) which will be used if you are unable to pay off the loan.
You don’t need to have collateral to seek a business loan, especially one that is unsecured. Unsecured business loans are based on your business’s financial health rather than collateral. Many nontraditional business lenders will base their decisions on your company’s cash flow, sales and revenue. The industry your business operates in may also affect the lender’s decision.
The cost of the loan will depend on the lender you apply with and the type of loan. You may find that any of the following costs apply:
- Interest rate. You can usually choose between a fixed or variable rate, or you may find a factor rate applies. This rate is charged as a decimal point figure instead of a percentage and calculated on the original loan amount rather than the principal amount remaining.
- Upfront fees. Fees charged upfront can come in the form of an application fee, an establishment fee, a loan documentation fee or a loan origination fee. You should only be charged these fees if you’re approved for the loan.
- Ongoing fees. Monthly or annual fees may be charged on an unsecured business cash loan, as well as direct deposit fees.
- Late payment/default fees. If you’re late with a payment or default on the loan, you will be charged a fee. Check whether the fees are charged daily, weekly or monthly for late payments.
As with any type of loan, there are a few things to consider before you apply:
- Financial risk. As this is a type of business financing, you need to keep in mind that you’re not only putting yourself at risk, but also your business and any employees you may have. Since these loans are unsecured, the lender is unable to repossess any personal or business assets, but they are still able to take you to court should you default on your loan.
- Borrowing more than you can afford. Another thing to watch out for is the loan amount you’re being approved for. Lenders base this amount on your average monthly sales, so if you average $10,000 in monthly sales, you may be granted up to this amount with some lenders. But what the lender may not anticipate is your business’ future cash flow fluctuations due to seasonal changes in your industry – fluctuations which you should anticipate yourself. Only borrow what you can afford to pay back.
If you’re interested in applying for an unsecured cash business loan, the first step is to compare your loan options. Once you’ve found the right loan, confirm that you meet the eligibility requirements. If you do, you can then start the application process by navigating to the lender’s secure website and selecting the “apply” button for the loan.
You will also need to provide certain documents with your application. This usually includes:
- Personal information such as name, address, date of birth and valid ID.
- Bank statements and business financials, including a cashflow statement.
- Rental forms for the business premises, as well as business address and contact information.