When it comes to applying for a small business loan, there are endless options, but an unsecured loan typically is the best option for franchisees. An unsecured loan is any loan from a lender that is based only on the applicant’s creditworthiness. There is no collateral to back the loan. By Chris Fuller
When it comes to applying for a small business loan, there are endless options, but an unsecured loan typically is the best option for franchisees. An unsecured loan is any loan from a lender that is based only on the applicant’s creditworthiness. There is no collateral to back the loan.
Other common options for small business loans include secured loans, SBA loans, home equity loans, and 401(k) rollover. Here, we break down all five loan types, and you can decide which option is best for your business.
Unsecured Loan
A small business unsecured loan is the smartest and safest for any business owner who pays their bills on time regularly. Provided you have a clean and clear path ahead for revenue, it’s simply the best option. American Business Credit has the expertise to help find the most suitable unsecured loan for you. Call us today, and let us prove it.
Secured Loan
Think unsecured loan but with strings attached. The strings could be your savings account, home, vehicle(s) and virtually anything else that can be used as collateral. Technically speaking, the borrower pledges an asset to the lender, which then becomes secured repayment in the event of default.
SBA Loan
If you choose to go the SBA route, and you qualify for everything needed, it can be a sound decision. However, to avoid minimum requirements and down payments, opt for an unsecured loan.
Home Equity Loan
This is exactly what it sounds like. Your home becomes collateral for the loan, and if you default, the lender has the right to auction your property. If you’re looking for a heftier sum of money, and you’re a smaller business, perhaps this is the right choice. But again, an unsecured loan does not require any collateral.
401(k) Rollover
ROBS, short for Rollovers as Business Start-ups, are loans to one’s own business through one’s 401(k). At first, it might seem like a no-brainer to use some retirement money as an investment. However, there are plenty of catches. First, you must operate as a C-corporation, meaning the business will be taxed separately from its owners. There are compliance fees, limits to what can be rolled over, and you’ll need to administer a retirement plan.
In the end, it should be plain as day that an unsecured loan is more than likely the best option for a small business owner to get the capital needed. Call us today for more info. We’re standing by!
Chris Fuller
Chris Fuller has been involved in business finance for over 25 years. Fuller started out in equipment leasing and then founded American Business Credit in 2006. American Business Credit’s core business has been to assist clients in using unsecured funding options to start and grow their small businesses.