Apply for only as much as your business needs with a business cash loan.
Cash flow is an issue for many businesses, and while the cash fluctuations may only be small they can have a huge effect on a business’ ability to run. Other small funding needs such as covering orders and purchasing stock may mean you 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 finance – find out what options are available.
What are unsecured cash business loans?
This is a type of financing that does not require you to attach an asset, whether it be personal or business, as security 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 the loan amount in your account quickly.
Compare secured vs. unsecured business loans
How do they work?
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. Businesses can apply for a loan up to $100,000 as either a lump sum or line of credit and have access to it the next business day.
Depending on the loan type you choose, you will either make regular repayments over a loan term of less than a year to repay the loan or you make minimum payments towards the line of credit based on the amount you use.
Compare top online business lenders for unsecured financing
How to compare unsecured cash business loans
When considering taking out one of these loans, it’s important to compare your options so you opt for the most competitive loan product for you and your business. Here are a few things to keep in mind when comparing:
- Can my business afford it? Before taking out any 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, 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.
- 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? The lender you borrow from should also form part of your decision. There are some unscrupulous lenders who operate in the online space, so remember to check their reputation, read third-party reviews, or see how easy they are to contact.
How likely is it that I will get a business loan?
There are different types of business loans you can turn to, but in every case you have to meet certain eligibility criteria. These requirements can vary from lender to lender so it’s best that you know your odds before you consider applying. With some lenders, the following criteria may need to be met in order to qualify:
- You are over 18 years old in most states.
- You have been in the 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 around $5,000 to $50,000.
- You have been renting your current business premises for a minimum period of time, and there is a minimum lease period remaining.
- You have the cash flow to make repayments.
- You offer suitable security which will be used if you are unable to pay off the loan.
What if I don’t have collateral?
You don’t need to have collateral to seek a business loan. Unsecured business loans are based on your business’s financial health rather than collateral. Many alternative 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.
How much will the business cash loan cost?
The costs of the loan depend on the lender you apply with and the exact type of financing. You may find that any of the following costs apply:
- Interest rate. This will be a fixed or variable rate if it is a standard interest 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 are 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 are late with a payment or default on the loan you will be charged a fee. Check whether the fees are charged daily for late payments.
Cautions to consider
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 finance, you need to keep in mind that you are not only putting yourself at risk, but also your business and any employees you may have. As 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 have averaged $10,000 in monthly sales you may be granted up to and including 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.
What are the tax implications of a business loan?
Taking out a business loan requires that you understand the tax implications involved. For example, you cannot claim deductions for most capital expenses that you bear when improving, expanding or replacing a business. This also includes a large portion of expenses you incur before the business gets going.
You can, however, claim deductions on the interest that business loans and overdrafts attract. You can also claim deductions, directly or via depreciation, on expenses that are incurred as a part of generating business income. Examples of such expenses include rent, telephone and internet bills, insurance covers, wages, accounting fees and business-related subscription fees.
How to apply for an unsecured cash business loan
If you’re interested in applying for an unsecured cash business loan, the first step is comparing your options. Once you’ve found the right loan you can start the application process by clicking ‘Go to Site’.
After confirming your eligibility for a loan, you will also need to provide certain documents with your application. This usually includes:
Identification documents for business owners and any loan applicants such as
- Bank statements and business financials
- Rental forms for the business premises