An advantage to unsecured business loans over conventional loans is that there is no collateral required to back them up. These unsecured loans can be made on the basis of the credit worthiness of the borrower, and are sometimes referred to as signature loans. However, unless you are on good terms with a private lender, or your business has an outstanding credit rating, it is unlikely that you will be approved for a very high loan amount — if at all. If your business’s credit is not well established, but you yourself do, it is possible that you may be able to obtain unsecured business loans with a personal guarantee. However, this exposes you personally, as you become the payer of last resort if your business operations cannot meet the loan obligations.
On the other hand, it is much easier to obtain capital from a merchant cash advance, which does not rely on your credit because it is not a loan. Credit worthiness does not normally play a very big part in the approval process for a merchant cash advance, because it is repaid from the credit card receipts generated on a daily basis by your business. The advance is actually from the discounted purchase of a portion of your credit card receipts, so it does not require you to make fixed monthly payments like a loan does. You should avoid doing business with any merchant cash advance provider that requires you to put up collateral or provide a personal guarantee — this is simply not required for this type of transaction. The approval rate for a merchant cash advance is much higher than that of unsecured business loans, and it is likely that you will be able to get a larger amount of capital by this method, as well.
Tags: Unsecured Business Loans
