As a small business owner in New York, it’s likely that you’ve found yourself needing additional financing to cover startup costs, get more employees, buy additional inventory or cover some other need.
Lenders usually offer two main types of funding: secured loans and unsecured loans. But which type of loan is right for you? Understanding the differences between the two could be the difference between a safe infusion of cash and a costly miscalculation.
What is an unsecured business loan?
The main difference between secured and unsecured business loans in Manhattan is that the latter doesn’t demand the borrower to provide any collateral against the amount they’re borrowing.
Because an unsecured business loan is better for the person borrowing, the lender generally charges much higher interest rates than they would for a secured loan. This kind of loan is also much harder to obtain because of this. The inherent risk involved in a business loan that is unsecured naturally means it will generally be offered as a short-term loan to eliminate the lender’s risk.
Benefits of unsecured business loans
If your business has enough goodwill like a strong credit score and you can afford the interest rates, there are benefits to obtaining an unsecured business loan in Queens.
The first and most apparent advantage is that you are not in need of collateral. Usually, lenders want borrowers to put up items of value like real estate, vehicles, or assets like investment portfolios and business trademarks as backing for the loan. Without the need to put those items at risk of seizure by the lender, you can rest easy knowing you will not lose them if something goes awry.
However, items can be seized by the lender if they’re included in the guarantee that every lender must sign to obtain an unsecured business loan. Such an agreement is legally binding.
Risks associated with unsecured small business loans:
While the benefits may seem nice, there are some major caveats that you must consider when looking to obtain an unsecured business loan in Long Island. First and foremost, you may not even be qualified for one.
Lenders heavily rely on your personal or business’s credit to determine whether or not they’re willing to offer you any type of loan, but given the high risk of unsecured business loans, the bar is set a lot higher. While there’s no minimum credit you need for a short-term business loan like this, a lower credit tells the bank that you may not be able to pay the loan back.
If your personal credit isn’t good, your business has a bad credit history or your bad credit regularly keeps you from getting a credit card, let alone other types of cash advance, your loan application won’t land you any extra business financing opportunities anyway. It will always be harder to borrow anything if you have trouble making your payments.
With 3 locations in NY we are always available to help your business get the unsecured small business loan you are looking for!
Sky Small Business Loans 75-25 141st Pl #757 Flushing, NY 11367 (646) 885-1333 https://skybusinessloans.com/queens-ny-branch/
Sky Small Business Loans 630 5th Ave #8, New York, NY 10111 (212) 457-1581 https://skybusinessloans.com/manhattan-ny-branch/
Sky Small Business Loans 133C New York Ave, #9 Huntington, NY 11743 (516) 342-3336 https://skybusinessloans.com/huntington-long-island-ny-branch/
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