Unsecured business loans are financial tools directed mostly at entrepreneurs and business owners. By taking out unsecured loans, businesses may secure the funding they are in need of to create a new business from the ground up, buy equipment and supplies, and handle their cash flow.
Unlike secured business loans that require the person borrowing to put down collateral, unsecured business loans don’t have that requirement. Therefore, borrowers who are in need of cash for their business can use unsecured business loans without putting down a considerable deposit or pledging their house or other assets as a backup if they can’t pay.
While not right for everybody, unsecured business loans may solve many financial shortages and funding problems a lot of businesses have.
Though people tend to believe that unsecured business loans are not as risky and less expensive than secured loans, this isn’t necessarily the case. Read these myths about unsecured business loans, in addition to the reality behind them:
Myth #1
Since I didn’t put down collateral, nobody can make me repay this loan in case my business fails.
When you’re not demanded to put down collateral, it’s easy to think you can’t be held liable for repayment if your business goes belly up. This is untrue.
Taking out an unsecured business loan in San Antonio will demand you to make a personal guarantee for repayment, meaning your individual finances are on the line too. If your business fails, you will still need to repay your loan.
Myth #2
Unsecured business loans are not as risky.
Because secured business loans require you to necessarily put down collateral, the lender is able to seize that collateral if you don’t repay your loan. If you’re using your house as collateral, for example, that is scary, so it’s natural to think that secured business loans come with additional risk.
Before you assume that, you must know how unsecured business loans in Houston work in the case of default. Because you do not provide collateral for an unsecured business loan, the party lending you can come after all your assets – even future earnings — if your loan falls into default.
The lender will sue and get a court judgment against you before seizing your assets, but a lot are willing to sue – especially if you have a lot of assets. In that respect, unsecured business loans are riskier than secured loans.
Myth #3
Unsecured business loans are easier to get.
While it’s true that unsecured business loans in Dallas may demand less paperwork, they are always more expensive over the long run. Since unsecured loans don’t demand collateral, they tend to come with more interest rates that can increase the cost of your loan over time.
Since it is riskier for the party lending you to loan money without securing any collateral in return, the interest rates charged on unsecured business loans are higher to account for that extra risk. That means you’ll pay more for an unsecured loan.
For the best rates on unsecured small business loans in all of Texas contact us today!
Sky Small Business Loans 2517 Inwood Rd Dallas, TX 75235 (469) 251-7444 https://skybusinessloans.com/dallas-tx-branch/
Sky Small Business Loans 5718 Westheimer #1000 Houston, TX 77057 (713) 332-9929 https://skybusinessloans.com/houston-tx-branch/
Sky Small Business Loans 18911 Hardy Oak Blvd San Antonio, TX 78258 (210) 660-5444 https://skybusinessloans.com/san-antonio-tx-branch/
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