If the bank says NO, DFS can get you a YES!
When it comes to financing your business, one of the decisions you’ll inevitably face is choosing between a secured and an unsecured business loan. Each option has its pros and cons, and understanding the differences between the two can help you make an informed decision that aligns with your company’s needs and goals. In Australia, where the business landscape is vibrant and diverse, it’s essential to explore your loan options thoroughly.
Let’s delve into the key features, benefits, and considerations of secured and unsecured business loans to help you determine which one is right for your business.
Secured business loans are business loans that use collateral such as real estate, equipment, or inventory, as security for the loan. These loans are considered less risky for lenders and often come with lower interest rates and higher borrowing limits than unsecured finance.
Unlike secured loans, unsecured business loans do not require collateral, making them a potentially viable option for businesses that lack substantial assets or are the start up business phase and are yet to acquire business assets.
Private lenders will generally offer unsecured loans as well as secured loans! Many Australian business owners utilise private lenders when seeking business finance, due to the flexibility and fast funding that private lending offers. In addition, private lenders aren’t bound by the same rigidity of traditional lending criteria, making them a potentially better match for Australian businesses.
Generally speaking, when accessing either secured or unsecured finance, the lender will want to determine your ability to repay the loan, typically through your business financials including your cash flow. For small business loans or for businesses who may not have held a credit product before, lenders may request business financial statements, history of the business bank account or business plans to help determine the business health to be able to loan funds.
While creditworthiness via a credit check is typically part of the application process for all lending, private lenders and alternative financiers may not need to rely on your credit history to approve the loan. Small business owners typically invest their blood, sweat, tears, as well as their own personal finances to help realise their business venture — which often leaves a market on their credit history!
If you have no business history, and want to avoid taking out personal loans to fund your business goals, consider speaking with specialists in private lending!
When deciding between a secured and an unsecured business loan, consider your business’s specific needs and circumstances. Things to consider will be whether you have an asset to offer as security. This may include an investment property, family home or business equipment.
Secondly, your financing needs will guide your decision on which loan product (and which lender) is going to be best for you. Accessing lenders that specialise in business loans may be more beneficial than seeking out a generic lender, or one who isn’t familiar with assessing applications from business owners.
Both unsecured business loans and secured loans hold purpose in business financing. To help guide your decision, it is prudent to consult with a business financing professional, such as a financial adviser or accountant.
When deciding between product types and lenders, consider a business broker who can look at multiple lenders and determine which may be the best loan for you, based on your unique goals and financing needs. At DFS, we have access to over 200 of Australia’s top private lenders, which means that we are wel positioned to work with you to find the most suitable business loan for your needs; whether it be a secured loan or unsecured loan.
Reach out to the team to learn more!