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What are the Benefits of Unsecured Business Loans?

If you are a business owner and you’re looking for a quick and simple way to boost your financial health, then an unsecured business loan is a great choice.

When it comes to these types of loans, the word ‘unsecured’ may leave an anxious feeling.

This shouldn’t be the case though, as these loans can actually provide many benefits to businesses of all sizes.

Here at Smart Funding Solutions, we’ve seen the great effects these loans can have on our clients and their businesses, and we’ve created this guide to fill you in on some of the great features of this form of business funding.

Let’s take a look.

Why People Choose Unsecured Business Loans

There are many situations that lead people in the direction of unsecured business loans, including these three:

  • You’re a Start-Up or Small BusinessSmall businesses, including start-ups, often don’t have the assets and bank balance of larger, more developed businesses. This can make it tricky to get a loan as you won’t have collateral. An unsecured business loan bypasses this issue, providing funds without the need to provide assets as part of the promise.


  • You Are Heavily Reliant on Equipment – There are many businesses that need equipment to perform their daily tasks, such as people in the aviation, dental, and construction industries. Without this, the business cannot operate and will lose out on a big chunk of revenue. In this case, you may not want to risk adding this asset as collateral to a loan, just in case the worst-case scenario happens and you may lose it.


  • Businesses with Good Credit – As an unsecured business loan doesn’t require collateral, there is a strong emphasis on credit scores. This means that if you have a good score, and a strong credit history, then you should have no problem getting quick acceptance for a loan and may even be able to get favourable terms.

Unsecured business loans are ideal for many situations, including the three above, and that is because of the many benefits they provide.

Why not take a look at our blog on ‘the common signs your business may need an unsecured business loan’ for more information?

business owner smiling on the phone

7 Benefits of Unsecured Business Loans

Faster Funds

Because of the nature of unsecured business loans, the process behind securing one can be much quicker than a secured option.

With no collateral needed, there is no evaluation process, and this can be a major part of a loan application that slows it down considerably.

Getting access to a quick business loan can be a major benefit for businesses that are in an emergency and need funds fast, as the process can be done in a matter of days rather than a much longer timeframe.

Check out our guide for more advice on achieving a quick business loan.

No Collateral Needed

We’ve touched on this throughout the blog, but we’re going to mention it again as it is a key element of an unsecured business loan and one of the major advantages.

Not having to supply any collateral is ideal for businesses who are looking to gain funds, but don’t want to risk their assets.

If a business relies on its assets heavily, or simply doesn’t have much equipment of high financial value, then not having to add any to a loan can be a big weight off their mind.

Even if you are sure you can pay the loan back, adding an asset as security still puts it at risk, and if something goes wrong you could lose a vital piece of equipment which will put your business in deeper trouble.

A Simple Application Process

When it comes to applying for an unsecured business loan, the process can be quite straightforward.

As mentioned above, there is no need for complex asset evaluation, and in many cases, you may just have to send over some financial documents and you could be good to go.

For business owners who may be lacking in time and who want to avoid a big administrative burden, this is a good choice.

You can avoid the need to amass large amounts of paperwork, not have to wait for people to look over your assets and choose collateral, and get the funds you need with much less work.

Ideal for Businesses of All Sizes

An unsecured business loan can work well for businesses of any size.

While large businesses can take out this kind of loan, and it can work really well if they are in need of quick and risk-free funds, it is also a great choice for smaller businesses.

This is because it doesn’t require high-value collateral and significant assets, and instead focuses on financial stability.

This makes it an ideal choice for start-ups looking to grow and scale their business, but who may need a little bit of financial backing to get there.

Builds Credit History

These types of loans are good for people with a good credit score, but for businesses lacking, it can also be a good choice to take an unsecured loan.

This is because if you get approval and start paying the loan back, your credit score will begin to rise.

Responsible repayment is key to establishing a solid credit history, and this is the perfect way to get a loan if you are a small business and kick-start your credit.

If you’re looking to borrow more funds in the future, you may rely on your credit score so building it up as quickly as possible with an unsecured business loan is always a good idea.

If you’re unsure of your credit rating, why not get an insight report today?

Provides Flexible Funds

With some loans, you are tied down to a certain usage for the funds.

An unsecured business loan can be much more flexible, allowing you to spend the funds however you would like.

What this means is that you can spread it across various sectors of your business, such as marketing, staff training, equipment, and more.

This can be great for providing an all-around boost to your business and also means there will be no restrictions or tied-up assets for the longevity of the loan repayments.

Shorter Loan Terms

Unsecured business loans can often come with shorter loan terms.

This can be a big plus for some businesses as they won’t be burdened with repayments for a long amount of time.

For businesses who just need a sharp injection of cash, to get over seasonal dips or solve emergencies for example, this can be a great way of getting the funding you need but not tying your business down for a long time.

Not only does this mean you get through the repayment period quicker, but it can also mean that interest payments are kept down, as it doesn’t build up over many years.

start up business owner doing presentation

Unsecured Business Loans from Smart Funding Solutions

Unsecured business loans are useful for many different reasons and to many different businesses.

If you would like to discuss taking a loan, or simply have more questions, then why not get in touch with Smart Funding Solutions today?

Our team can help you apply for a loan and secure funding from a trusted lender within 48 hours.

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