What is a collateral-free or an unsecured business loan? How to?
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A collateral-free business loan or an unsecured business loan works exactly like any regular small-business loan except you are not required to submit any form of collateral guarantee.
Like, in equipment loans where you buy a piece of equipment on credit, the equipment works as collateral for the loan, and you do not require to offer any more additional collateral.
Collateral free business loans are generally very fast to get because all the time that usually spends on the assessment for the collateral is not required here which saves so much of the time.
All different kinds of unsecured business loans
There are different types of business loans that come as collateral-free or unsecured business loans.
Merchant Cash Advance Loans - Collateral-free business loan
The most common and widely used type of collateral-free business loan is a merchant cash advance loan from cash advance companies like Merchant Cash Advance 360.
Merchant cash advance loans are based on the current financial health of the business rather than collaterals or other personal guarantees. Business owners can apply for cash advance loans even with a bad-personal credit-score and can get approved easily on a little higher loan price.
With a merchant cash advance loan, you are loaned a set amount of cash from Merchant Cash Advance 360 then you pay back that amount plus a fee. In this approach, we are essentially buying a portion of your future sales.
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Unpaid Invoice Loan or Invoice Financing
Invoice financing allows businesses to obtain money against the amounts due from customers. Invoice financing is also known as accounts receivable financing or receivables financing.
Customer invoices work as collateral here. The usual rate on which Merchant Cash Advance 360 buys invoices is around 80% of the total invoice amount.
Invoice financing helps businesses improve cash flow, pay employees and suppliers, and reinvest in operations.
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Equipment Loan or Equipment Financing
- An equipment loan is a loan that you can take out with the sole purpose of purchasing equipment for your business. The equipment itself secures the loan. So, if you default on the payment, the financing company will take the equipment from you.
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