In this article, we go over the most important details that every business owner should be aware of for current unsecured loans.
What does a loan with collateral mean?
An unsecured corporate loan means that a borrower does not have to provide any collateral, that is, no property or material need to be pledged. However, there may be requirements for a personal guarantee, which gives the lender a greater security. The most common type of collateral for a loan is a mortgage, where a property serves as a guarantee in case the company has trouble repaying or going bankrupt. The main idea of a secured loan is to eliminate the lender’s risk. Loans with collateral are usually available at a lower interest rate than unsecured loans.
Corporate loans without collateral are becoming increasingly popular in the country and in fact it is a fast growing market with more and more players. These types of loans are easier to obtain and are primarily intended for small businesses that generally have difficulty obtaining corporate loans from major banks. In short, “unsecured loans” is a type of corporate loan without a collateral in the form of physical or financial assets.
But the fact is that there are very few lenders offering corporate loans without any kind of guarantee at all. Most lenders require the self-employed person to enter into a personal guarantee to be granted a corporate loan in the country. There is also a variant of corporate loans with partial collateral, which means that parts of the loan require a collateral in the form of personal guarantee.
Corporate loans without collateral for different types of company
Corporate loans do not differ significantly from ordinary private loans and follow the same principle: a person applies for a loan without collateral and his / her company pays amortization and interest on a monthly basis.
However, terms for unsecured corporate loans may differ between different types of companies. When it comes to an individual company, it is not a legal entity of its own, the owner of the company applying for the loan has its own private finances as collateral. Amortization and interest are paid by the owner. In the case of limited companies, it is in any case the limited company that signs the loan through a competent company subscriber. Amortization and interest are thus paid by the limited company.
Business loans without collateral with and your business needs
When choosing between different options and comparing business loans that would suit your business, think about what kind of loan will be more advantageous to you: short-term or long-term loan. Exactly review your company’s current capacity and financial situation to determine whether a loan with or without security will be best suited for your business. No matter what type of loan you decide on – with security or without, we offer a free service that allows you to compare all loan offers from a wide range of lenders available in the market.