By Luke Bowmar, Commercial Partnership Manager, Spotcap UK
Have you been looking for funding to capitalise on a key business opportunity? To buy new stock or refurbish your premises? Or simply to manage your cashflow?
If so, a fully unsecured business loan – without the need for a personal guarantee – might be the perfect solution. Here I offer three reasons why you should be considering a fully unsecured loan for your next business move.
1) No guarantees necessary
With a fully unsecured loan, there’s no need to provide any collateral and – more importantly – no personal or director’s guarantee. As considerably higher risk is involved with an unsecured loan, many lenders have technology in place which quickly sifts through relevant financial information, helping underwriters make a quick and reliable credit decision. And because there is no need to check collateral or personal guarantees, a decision can often be given within one working day.
One thing to consider is that fully unsecured lending generally appeals to a niche market, namely established small and medium-sized businesses with a positive financial track record.
2) It’s cheaper than you think
Several years ago, charges and interest rates for fully unsecured loans were much higher than for secured ones as lenders struggled to assess risk properly. However, due to financial information now being available in a digital format and thanks to new technology, it is much easier for lenders to determine the level of risk and set the appropriate interest rate. As a result, the interest rates of fully unsecured loans tend to be only slightly higher than those of a secured loan.
Lenders often provide a credit line, a pool of money to borrow from as and when the funds are needed. This allows providers such as Spotcap to only charge interest on withdrawn funds. If money isn’t used you don’t pay, all while having the safety net of cash you can call on, should you need it.
3) Addressing your business needs
Due to its nature, many business owners and financial directors secure a fully unsecured loan to meet their short-term needs, such as bridging a cash flow gap, restocking inventory or refurbishing premises. While businesses working in any sector can benefit from an unsecured loan, this option is particularly appreciated by professional services companies as they normally don’t dispose of any assets, such as heavy machinery or want to put their property on the line.
For example, we here at Spotcap recently provided an unsecured loan of £250k to a recruitment agency. Due to expansion plans and having secured a new client, the agency was in need of a loan for fifteen months to bridge incoming payments.
Unsecured loans offer flexibility without risking your business or personal assets. If you think your business could benefit from a boost in cash flow, visit Tower Leasing’s Alternative Finance page or get in touch with a Tower Leasing representative.