Every business is liable to risk and crisis. However, your ability to manage such crisis will boost the chances of your business to survive and prosper. When it comes to surviving, and recovering from a crisis which might have affected the business, the first thing needed is money. The question every business owner always ask is “How do I get that cash?”
There are lenders who will have an interest in funding your business when it is flourishing but the major challenge is how to get such loans during a difficult time.
This is where unsecured business loans come into the picture and act as leverage to the business owner. The business owner can get a loan and pay it back in installments every month. This makes it very easy to repay the loan without attaching any business assets.
The most vital advantage of the unsecured business loan is that the borrowers does not need to provide any form of collateral and therefore has no risk of losing his assets if he is unable to repay. Another advantage is that the lender does not impose conditions on how the funds are to be used unlike the secured business loans, which the borrower is offered the loan based on what the lender says. Most of the time, the lenders emphasize on keeping to a debt-equity ratio that is minimal to protect the amount loaned. Such restrictions can prevent the business owner from recovering from the crisis.
The rate of interest of unsecured business loans is much higher compared to that of secured loans and it depends on the credit history of the borrower, the amount borrowed and repayment period. Terms and conditions are discussed between the lender and borrower. There are certain issues the borrower has to be cautious about when planning to get an unsecured business loan:
Prepayment: This should always be settled before borrowing money from the lenders. Most borrowers do not allow prepayment but to stay in tune with market trends, lenders would allow it after 3-5 years. It gives borrowers the chance to eliminate the burden without getting penalized.
Solicitor’s Fees: The borrower should try and negotiate this fee before the loan is concluded because he is liable to refund it if the lender acquires it for recovering a loan that has defaulted.
Grace Period: The grace period is the period extension for the borrower to repay without any penalty. Negotiation can certainly take place between both parties for an extended grace period which would make it easy for the borrower to pay. The more the extension the easier the repayment.
Late payment charges: This can also be negotiated between the lender and borrower when there is a delay in payment.
Unsecured business loans are very helpful for business owners if they take the necessary precautions such as choosing the right lender. This can help them get a very good deal where the much-needed fund assistance and refund conditions are very favorable and financially feasible.
Do you need an unsecured business loan solution? Check out our partners over at Unsecured Finance Australia. Our team has worked closely with these guys for a long time and they are the real deal.