When you need that extra funding for your business — whether to cover expansion costs or maintenance expenses — it is crucial your only option is to apply for a loan and build business credit. But before stepping into a bank, you should ask yourself: Do you want to build business credit through secured or unsecured financing? Here is a short guide to help you decide.
- Collateral
Secured business loans require you to provide a collateral — something of value that the lenders can sellizeor liquidate if you will not be able to pay back the loan. This could be your house, car, jewelries, and other assets. In some cases, the amount of the collateral could be is greater than the amount of the business loan.
With unsecured business loans, you will not be required to provide collateral in order to get financing. Among the criteria that the lenders use to rate your creditworthiness rely only on instead is the strength of your business and your corporate credit history.
- Annual Percentage Rate APR (APR)
Secured business loans typically offer lower interest rates as the lenders have a guaranteed hold on a collateral.
With unsecured business loans, as long as your business has a good credit standing, you should be able to get a low APR.
- Line of credit
Since lenders have the protection of the collateral, secured business loans usually have varying a higher credit limits.
Take note, however, that depending on if your geographic location has many available lenders, you can get avail up to $250,000 in unsecured business loans using your stated income only. If that amount is enough to cover the financial needs of your business, it might be wiser to choose unsecured funding.
In conclusion, all businesses are prone to risks and unsecured business loans are always best for a business. It may seem like secured business loans is the bestalso a good option for your company , but do you really want to risk your home and other assets in case of unforeseen business mishaps? If notyou do not want to risk them, then unsecured business loans is are the best optionway to fund your business and build business credit and build business credit.
Are you ready to build business credit now?
Visit CorporateCashCredit.Com and get a free business credit analysis. At Corporate Cash Credit, We also have a team of financial experts who will guide you through the entire application and funding processes to build business credit. It’s a full service program, so even if you currently do not have an 80 Paydex score, for example, we have a wide range of services to help you meet the necessary requirements for your business to look great to lenders. You may Contact us through our online chat or by calling at 786-930-4547 and start to build business credit today!
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