Unsecured business loans are the financial assistance given to startups and small businesses that do not have collateral or security to offer for a loan. In today’s tech-savvy, remote-first world, not many businesses have tangible collaterals to show. In such cases, these loans come in handy. They can be utilized to expand the business and take it to new heights or maintain the cash flow. Unsecured business loans are a great funding option for businesses that don’t own physical assets, the ones that prefer not to offer security or any business that’s growing rapidly and requires capital quickly.
Some common types of unsecured business loans are:
Term loans: Term loans are financial assistance where a bank lends money to a business, with interest adding up over time, and regular repayments are made over a set loan term
Working capital loans: Working capital loans are the ones availed to ensure a constant flow of working capital to keep the business floating
Merchant Cash Advance: A merchant cash advance is an advance based on credit card sales deposited in the merchant’s account. The amount here is based on the number of credit card swipes or the monthly volume of transactions
Invoice factoring: This is a type of invoice financing where the business sells its outstanding invoices to a factoring company at a discount and receives a portion of the invoice balance as an upfront payment
Revolving credit: Revolving credit refers to an open-ended credit account like a credit card or other lines of credit that can be leveraged and repaid as long as the account remains open.
