Loans for Small Businesses: Running a business with less than adequate working capital is not possible. All types of companies need money to take the business to such heights that it starts to break even. Credit is required to launch a new product or service, invest in machinery, pay off previous debts, pay salaries, ensure enough working capital is there, and much more.
This is where unsecured business loans become useful. They have gained immense popularity over the years as they can help cover diverse business expenditures quickly.
How Can Unsecured Business Finance Help Small Companies?
For small and medium-sized companies, unsecured loans are highly recommended for the following reasons:
4 Benefits of Loans for Small Businesses
1. No Need for Collateral
When it comes to pledging assets like office premises, equipment, and others as collateral, a small business owner prefers not to do so because these assets can help a business grow fast in the initial phase.
However, people do not need to offer collateral for unsecured finances as this type of business loan is provided without any guarantee or collateral. Consequently, all the assets owned by the business stay in the company’s name as the borrower repays the installments.
2. Eligibility Criteria Are More Relaxed
The eligibility criteria for unsecured business finance are relatively less rigorous compared to secured loans. This is why unsecured business loans are the best solution for a person looking for a quick loan with not so stringent application criteria. The criteria required to apply for this type of loan in Australia are:
- They must be in business for six months or above. However, this can be lowered to three months, depending on the circumstances.
- They must have an Australian Business Number (ABN) to prove that the company has Australian registration.
- The company must have a turnover of at least $60,000 per year or more.
- They must have an active online bank account.
3. Repayment Tenures Are Flexible and Customisable
When people look for business loans for start-up companies, they also look for repayment tenures that are flexible and customizable because, in that initial phase, cash flow remains inconsistent.
This might happen because one quarter had witnessed substantial revenue, but another had not. In that case, no security business loans can provide them with flexible repayment terms so that the burden becomes less. This way, start-ups can adjust their tenure according to their cash flow cycles to comfortably pay the installments.
4. Minimal Documentation Is Required
Unlike secured finance, the debtors do not need to submit any hefty paperwork while applying for unsecured commercial loans. Even though such loans are free from collateral, only minimal documentation is required to access the funds. The standard documents required to apply for this loan are:
- Driver’s license
- Australian Business Number or Australian Company Number
- Tax records and recent bank statements for the business
- The company’s business plans show how they will use the funds
All the above points prove that unsecured business loans are a safe and easy option to get quick funds for small businesses. Start-ups do not need to worry anymore about sudden cash requirements.
All they need to do is contact a reputable finance company that provides collateral-free, no security loans to small companies at attractive interest rates with flexible repayment tenures and get started. They are sure to enjoy the various benefits these loans provide.