Nowadays, there are a lot of good financing solutions for companies in the market: There are invoice financing solutions like factoring and invoice sales as well as various types of corporate loans and corporate loans. Most corporate and corporate loans, like a home loan, require real security – that is, real estate or, for example, a cash deposit. However, there are also unsecured corporate loans as well as corporate loans with sufficient personal guarantee.
Corporate loans can be divided into many different groups based on their characteristics – one straightforward dividing line is to divide them into secured corporate loans and unsecured corporate loans. Unsecured corporate loan or corporate loan is financing that does not require any collateral. However, you should be careful, because often when talking about unsecured credit, it really means real unsecured credit.
As collateral, a personal guarantee or personal guarantee
Actually, completely unsecured corporate loans are relatively rare, although many traders also prefer to market real unsecured corporate loans and loans as unsecured . Generally, the cost of a completely unsecured corporate loan is significantly high and / or the amount offered is modest, as from a financier’s point of view, a completely unsecured corporate loan is a relatively high risk. Generally, it is much cheaper for an entrepreneur to seek a real and unsecured corporate loan that is reasonably and responsibly than a fully open Corporate Loan.
When we speak of “unsecured corporate credit facility” or “v akuudettomasta business loan,” therefore, refers often means that there is no need for real guarantees for loans, ie collateral in the form of, for example, owned property or document. However, there is almost no exception to the need for some kind of collateral for financing, and credit is usually secured by a collateral or personal guarantee .
Fully unsecured corporate credit can be used for a short-term, usually smaller amount, when the company is prepared to pay a higher price for it than other financing. But, as mentioned, in the case of any major financing need, the necessary credit may not be obtained without any collateral, and because of the high price, it is not worth taking when other services of more appropriate price and features are available.
What is the purpose of applying for unsecured business credit?
Banks and finance companies provide corporate loans to companies. There are many different types of corporate loans and completely online loans, real unsecured loans, and real estate collateral loans, most often from the bank. The type of corporate credit best suited to your business will largely depend on your business needs, such as how quickly you need financing, whether you need flexible financing in the form of a credit line or lump sum, and how well the company meets the lender’s requirements.
Unsecured corporate credit is often applied for in the following situations, for example:
- the company does not receive credit from the bank because the company does not have the required real collateral or does not meet other bank requirements
- the company needs money quickly, and ideally, it should be credited within a few business days
- the company did not get enough credit from the bank and needs more money in addition to the financing provided
Even if a company has the necessary collateral for a bank loan or credit, negotiating a loan with a bank may require extensive background research and multiple visits to a bank branch. Aside from the fact that a bank loan may not be available quickly, there may not be enough funding available, and therefore, unsecured corporate loans are often used as a supplement to a bank’s demand for corporate financing.
Because a business loan or business loan without real collateral is available very quickly, unsecured financing is also sought for everyday situations and when it is desired to have access to finance flexibly, according to the company’s needs. Such unsecured corporate credit can be beneficial to a company when:
- business is seasonal and therefore cash flow fluctuations need to be adjusted
- customer payouts are long and temporary cash shortages need to be rectified
- there are unexpected costs: equipment or vehicles that are essential to your business are broken
- we want to expand our business and make new investments
What type of company is eligible for a real unsecured business loan and what does an unsecured business loan cost?
To qualify for a real unsecured business loan, the company must meet the requirements set by the lender. There may be slight differences in the requirements depending on the financial company or bank, but in general, the company applying for a loan must meet at least the following criteria:
- the company is registered
- the company has a bank account
- the company has been in business for at least a few months and has cash flow
- the company, and its owners, do not have payment default records
After a favorable credit decision, the company will receive an offer showing the amount, loan period and financing costs. The cost of the credit and the interest rate depend on the applicant company and the lender. Expenses are largely influenced by the amount and term of the loan, but the company’s turnover and ability to repay may also play a role.
The cost of an unsecured corporate loan is generally comprised of the interest payable on the credit and other costs such as possible handling fees, opening fee, billing surcharge and monthly fees.
You can also qualify for a real security-free business loan as repayment free
Traditionally, credit is repaid according to a specific payment plan. The payment plan commits the company to repaying the loan at certain intervals, for example monthly, which may not always be very flexible for the business of the company.
A more flexible counterpart to credit tied to a payment plan is the repayment free credit. The repayment free business loan, for which no real security is required, is obtained from us. The biggest benefit of a down payment loan is that the company can flexibly repay the loan when the time is right.
Repayment Free Business Loan, also known as a business credit line, is similar in principle to a credit card or credit account. The amount of credit can be increased and the loan extended, as required, and the credit repaid without the binding effect of a pre-agreed payment plan. Learn more about Flexible Business Limit.