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Is an Unsecured Business Loan for You?

Do you have a small business, but can’t find a lender? You are not alone. Even though there has been a resurgence in small business, most banks still won’t work with merchants in high risk industries. Luckily, there are more flexible and advantageous options for small businesses that seek loans. One of these options is unsecured business loans. However, no funding option is without its risks. Here are a few things to consider about unsecured business loans.

Quick Money

Funding is generally much faster with this type of loan, so lenders won’t spend time appraising the value of your assets since collateral is not required to secure funding. Plus, most lenders who offer unsecured loans use fast application processing times as a major differential between them and traditional lenders. In fact, most online lenders can offer borrowers funding within a few days.

Less Risk

According to the Bureau of Labor Statistics, about half of all small businesses fail within the first 5 years. Since unsecured business loans don’t require collateral, merchants won’t have to worry about losing their most prized assets in case of bankruptcy. But if the loan is secured, like with a traditional small business loan, your home, personal savings, or inventory could be up for grabs if your business fails.

Bad credit? No Problem

Credit is usually an obstacle when high risk merchants are applying for loans. Unsecured business loans don’t require perfect credit. In fact, many lenders will give funds to businesses with credit scores in the 500s.

Higher Rates and Smaller Loans

To compensate for fast funding and much less stringent requirements, high risk lenders charge a much higher annual percentage rate. APRs are generally in the double digits and can go as high as 100%. However, traditional small business loan APRs are between 5.75% and 8.25%. Unsecured loans should be utilized for smaller, short-term business expenses like making small repairs or purchasing additional inventory.

FAM is a high risk lender that has helped many small businesses attain funding. First American Merchant loans involve a low hassle application process that will get you critical small business funding in less than 72 hours. There are no tax returns or financials required. Contact us now to start your application.