If you haven’t considered business loan options until now, and you’re just getting started, you’ll want to consider all the available options. To simply start, business loans come in one of two main types: secured and unsecured. There are important differences between them.
Unsecured business loans will not require you to provide upfront collateral. Alternatively, a secured business loan will require collateral. If your business were to default on its loan repayments, a lender will move to liquidate collateral to regain financial loss. If you’re considering a secured or unsecured small business loan, this article is for you.
Secured loans require collateral. Collateral is usually accounts receivable, equipment, inventory, and real estate that is of equal value to the loan amount. In some cases, a lender may require collateral be valued above the loan amount. This is usually because liquidated collateral is sold quickly at a low price. A lender views collateral as financial insurance. Should your business default on payments, collateral is quickly sold and its value applied to the outstanding balance of the loan.
Secured loans present less risks for lenders. Because of this reason alone, they’re easier to obtain and offered with lower interest rates when compared to unsecured loans. They’re frequently offered with longer terms, which is another added benefit. Secured loan are based on the value of available collateral, and vary in amounts. By offering upfront collateral, getting approved for a secured business loan with low interest rates and longer terms is likely.
Unsecured loans present higher risks to a lender without the insurance collateral provides. When considering your unsecured loan application, lenders will closely consider your credit rating, ability to repay debt, and the financial strength of your company. These loans are usually offered at lower lending amounts and with shorter repayment terms to established companies (not startups) that have been in operation for more than two years. Lenders may also require a business prove earnings in excess of $100,000 or more per year to get approved.
How G-Force Can Help Fund Your Business
The great news is, G-Force Funding provides both secured and unsecured business loans. Apply today on our website and discover your options: https://gforcefunding.com/apply/