When you think of business loans, there are two kinds of loans that are destined to cross your mind, Secured loans and unsecured loans. Depending on the situation, the company’s financial capability and assets, a company may choose to opt for either unsecured loans or secured loans. Both these variants of loans have multiple advantages and disadvantages. For bigger and older companies with impressive bank statements, getting a secured loan might not be a stressful event but for new start-ups and SMEs, the only way to get successful funding might be by opting for unsecured business loans.
To add to the advantage, unsecured business loans have taken shape of the best small business loans that not only help individuals and companies, but they have also helped the local economy of state and city grow alike over the years.
To understand this factor better, we must first look into the advantages offered by an unsecured loan:
- No collateral required: Unlike secured loans, you don’t need to submit collateral of any sort when applying for an unsecured small business loan.
- Very Quick Disbursal: Unsecured business loans take a much shorter route to be allotted as compared to secure ones. Owing to minimalistic paperwork, an unsecured loan amount might be given out in just a few days, thus making it an instant business loan.
- Loan amount expenditure flexibility: Once the loan is sanctioned, it is up to the borrower’s discretion as to how he or she wants to utilize the money.
- Reusable credit: As long as the loan installments are being paid off timely, the credit taken can be re-used for further usage.
So this leads to the next question of how an unsecured loan helps the local city or state economy.
The following points highlight how unsecured loans have made a difference to the economy:
1) Remarkably reduces unemployment: As we all know; high unemployment rates might bring in a downfall in the overall economic status of a state or a city. Many individuals are often refused at job interviews owing to low qualifications thus, hindering them to grow on a future prospect. Many times, these individuals are up to the brim with business potential but are unable to invest due to the lack of collateral or financial support. With the help of unsecured loans, such people are able to set up their own businesses and provide means of revenue to not only themselves but also to others who are looking out for jobs in the same field of product or service.
2) Improves the state’s financial standards: More unsecured loans mean more businesses in operations, more businesses in operations means more products and services being sold to the public, by the public. The lack of funds may cause an SME to shut down its services temporarily as big financing companies may refuse to offer loans to them considering their lack of assets or duration of existence in the market. This is where the best small business loans step into place and help to generate revenue. Unsecured loans help new businesses to be established in the form of startups. This business may be in the form of a food chain, gym or even electronic gadget producer thus introducing a new era of unique products that were never offered earlier to the people of the city. The newly found business now boosts both standards of living and financial standards of the city itself.
Unsecured loans have provided that support that nurtures small scale businesses to grow without having financial burden. It gives small businesses the push it requires to sustain in the market and among its competitors. By helping business grow and thereby increasing the workforce it gives our economy the boost it deserves.