Unsecured Business Loans Explained

Obviously going "unsecured" means that it is a greater risk for the lender than a "secured" loan. Common sense is all that is required to understand why a lender would be prepared to lend on an unsecured basis. In other words, interest rates will be very high and therefore it will be expensive for the borrower.
 
That said, there are many opportunities for businesses when it comes to obtaining unsecured loans, provided its short term. With regards to business, unsecured loans are good for short term finance that enables the business to:

  • undertake a marketing campaign

  • pay for an import to be shipped, knowing that as soon as the shipment arrives, the goods will be sold at a far greater profit than the cost of the loan

  • expanding operations that will have short term returns

  • purchasing critical machinery or equipment for business operations to continue

The reasons for financing in a business are endless. Just be aware that unsecured lending is an expensive but quick and convenient option. Use unsecured loans wisely!