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Why is unsecured business loan better than a secured loan?
by Finway FSC Empowering People FinanciallyEvery new business need capital, not every individual has cash. People are often confused between a secured loan and unsecured business loan. As a borrower, you need to know everything about the loan before making a final decision. So, in this blog, we shall discuss why unsecured business loans are better than a secured loan.
Both of these loans are the polar opposite of each other. Secured Business loan required collateral while unsecured business loan doesn’t. If you are unable to return the loan, then your collateral can b seized in Secured business loans while nothing such happens in an unsecured loan. Secured loan is offered by almost every lender, but it takes at least a month to process. While unsecured loan is only offered by NBFCs and online lending companies in India and takes few working days to process.
Let’s now understand why unsecured business loans are better than secured loans.
Collateral
Collateral is a personal asset which is required for a secured business loan. In case the borrower is unable to repay the loan, then this asset is liquidated to repay the loan amount. This is similar to loan against property. Whereas unsecured business loans don’t require collateral and loan is given on your credit report.
Risk
There is a significant amount of risk involved when there is a personal asset at stake. On the other hand, in unsecured business loans, if you fail, your credit history will be doomed forever. One side is obviously heavier on risk.
Application Process
The major difference between secured and unsecured business loan is that the former is offered by banks while the latter is offered by online lending company or NBFCs. So, people need to visit banks various time to apply for their small business loan. This process involves the valuation of asset and documentation submission. On the other hand, NBFCs offer an online application process, and there is no need to visit their office.
Clearly, an unsecured business loan is better than a secured business loan. However, you won’t receive a big capital in unsecured business loan. You need to plan your EMIs with no initial revenue from your business. If everything is prepared for, then you should decide the tenure of your repayment at last.Sponsor Ads
About Finway FSC 
Empowering People Financially
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Created on Aug 28th 2019 23:37. Viewed 407 times.
