The unsecured working capital loan is the same as a working capital loan. Still, it specifically mentions that there is no need to show or submit any asset or collateral as security. Most of the working capital, especially small businesses, do not ask for collateral, but few loan providers explicitly announce that they do not need anything to be shown as security to obtain a loan.
Many lenders provide unsecured working capital loan up to 2 lakh dollars. This loan can also be obtained in the form of advance cash, which is a fast and flexible solution without the hassle, and they have no interest in security.
Is Unsecured Working Capital Loan Safe?
The loan providers look into a lot of factors based on your business income data and the documents, and then after a lot of consideration, provide the unsecured loan. It is clear that they trust you and your business are capable enough to repay the loan, and that is why security is not asked for. Thus, unsecured working capital loans are safer as one doesn’t have to suffer any collateral losses.
Key Benefits Of Unsecure Working Capital Loan
- Hassle-free loan application process:
The process of applying and obtaining the loan is quite simple and quick as there is no need to waste time on heavy paperwork and asset evaluation.
- No Collaterals:
Many lenders ask for assets to be put as collateral, and for businesses that are in the start-up stage, it’s a stake for risking everything they have. Here there is no worry about seizing collateral assets as the loan doesn’t require any security.
- Bare Minimum Criteria for loan
The criteria for obtaining unsecured working capital loans are elementary. It just requires bank statements regularly and government documents to verify that the loan claimer is a legitimate applicant. Essential criteria of age, income, IT returns, and identity proofs are considered, and the loan is sanctioned.
- Documentation is minimal.
Since no assets or properties are needed as security, the documentation becomes simple and easy.
- Flexible usage of funds:
Use your funds however you want as per the need. Most conventional loans require you to provide a pre-planned business development model and how the loan shall be used. But businesses are always unpredictable, and such necessities may rise where unexpected expenditures come up, and the loan fund shall be pipelined into another path. Unsecured working capital loans have the flexibility to use your funds in any way as long as the needs are legitimate.
- Helps in building credit scores
Have a bad credit score? A new business applicant fo all of your loans and banking deals that will help you in the long run. Nothing to worry about as an unsecured working capital loan is provided based on the profitability of the business and not on credit score. In fact, it helps in building an excellent credit history that can help in the future to secure more loans as the business expands.