Are you excited about starting your own business? You think you have a great business idea and proceeded with your business plan, hoping to get seed money from the bank. Unfortunately, the bank disapproved of the loan application. Then, should you drop your business idea? You should apply for unsecured business loans instead.
According to the Australian Bureau of Statistics, there were 2.3 million active companies by the end of 2017-2018. During the same period, new businesses accounted for 15.8%.
As of 2019, surveys indicate that Australian entrepreneurs started their businesses because of an opportunity seen in the market. With Australia’s infrastructure positively supporting startups, now is the best time to start your own business.
Every business starts with sufficient capital. Getting unsecured business loans is the answer to your business needs. Here’s why.
You don’t need to provide collateral
Financial institutions usually require collateral like property, vehicles, or other assets before approving a loan.
With unsecured loans, however, collateral is not required. You get the funds without having to pledge assets as a guarantee to back up the loan. Therefore, there is no risk of losing collateral in case the loan defaults. This feature is good news, especially if you don’t own any properties or if you are unwilling to risk losing any personal assets.
Unsecured business loans are short term
Your credit can be from 3 to 24 months only. This opportunity gives you enough time to test your business idea before upscaling.
Business sectors observe that more than 60% of small businesses close within the first three years. The most common challenges faced by startups are cash flow, deciding to expand too soon, and inexperience.
For your business to be part of the successful 40%, you need to strategize. Aside from learning as much as you can from the industry, your cash flow should be positive.
You get fast approval
Because there is no need to authenticate and evaluate the collateral assets, this speeds up the loan process. You receive your capital in the shortest possible time.
You can even start the business on the same day that the loan is approved.
It helps to build your credit score
Getting unsecured business loans is a great way to make a credit history if you do not have one yet.
Lenders always gauge credit history before releasing loan funds. If you are diligent in paying off your loans, you will earn a good credit score.
A good score will prove advantageous when you need additional funds to expand the business.
There are no restrictions
Lenders are not concerned with expenses, as long as spending is business-related. You are free to make decisions on costs.
Small amounts are allowed
With unsecured business loans, you can apply for small amounts, from a minimum of $5,000 up to $300,000.
If you are a cautious entrepreneur, getting a smaller loan to fund your initial expenses will prove less risky.
These benefits should convince you to take that first step in getting unsecured business loans. Getting the necessary funds will give you a head start on your entrepreneurial journey.