Why small businesses prefer unsecured loans?

The survival of a business, especially a small business, largely, if not solely, depends on healthy cash flow. At times, a business may be unable to generate sufficient revenue to match up to its ongoing expenditures or may need funds to expand or for bearing other costs. Usually in such cases, a business has to look out fora loan if there is no other source of funding.

Especially in case of small businesses, it is very crucial to pick the right loan for ensuring growth and success. Companies like Mintifi offer unsecured loans to businesses with the intent of giving opportunities to them to grow with the right funding at the right time.

Unsecured business loans acts as a messiah to these SMEs, allowing them to grow faster. Let’s have a look at why these businesses prefer unsecured loans over secured ones.

Easy access:

Unsecured loans guarantee timely and easy access to funds. They are able to procure them in a speedy, hassle-free and simplified manner, like never before.

Fintech companies have made the entire procedure extremely comfortable by making everything available online and some companies even have their own mobile App.

These new companies are growing to be more considerate to them and the challenges they face, as new entrants into the market.

No cash flow crunch:

Small businesses being averse to taking unsecured loans is gradually changing, as the fear that they possessed of being debt-ridden is weaning off.

In India, given the present scenario, the number of opportunities are rapidly increasing for small businesses. Having a good cash flow can boost the business by providing sufficient funds for expanding the business (financially and geographically),hiring staff and getting more inventory.

More relaxed repayment:

Small businesses can opt out for a flexible tenure for repaying the loan to the lending services.  Some fintechs may give options of repaying the installments either daily, weekly, fortnightly or monthly, significantly lowering the stress caused to small businesses.

Zero restrictions:

When businesses opt out for taking an unsecured loan, they can use it for any purpose, which isn’t the case with secured loans. An unsecured loan is more or less similar to a personal loan, reason being the person taking the loan doesn’t have to provide the lender reasons for which he/she is taking it, on the other hand a secured loan demands reasons, making it difficult for the small businesses.

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