It is the dream of every businessperson to expand his or her business. As such, getting a secured loan is one of the ideal ways to ensure you have sufficient cash to run your business activities. To obtain a secured loan for your business, you must provide the lender with a business plan, financial records, and realistic financial projections. Also, a good credit score will undoubtedly work in your favor!
The use of collateral enables you to obtain a loan with low-interest rates and a prolonged payment period. It is, however, advisable to do a comprehensive search on the lender before you hand over your collateral. Keep a record of the documents that you hand over, and clean up your credit score. Before you take a loan, make sure that you have identified a market opportunity that justifies the sourcing of extra capital.
Below are the benefits of acquiring a secured loan.
1] Access to Lower Interest Rates
Getting a secured loan is faster and easier than an unsecured loan, as lenders offer secured loans at lower rates. Because the secured loans require collateral, there is less risk to the lender, and thus the interest rates go down. There are two types of collateral, i.e., property or equity assets. When you offer collateral, it demonstrates to the lender that you are worth the risk, and that your business can generate valuable resources. The willingness to provide collateral, therefore, increases the level of confidence the lender has in you. In addition, the surrendering of collateral also attracts competitive loan options and products.
Provision of collateral, therefore, results in lower interest rates for you, the borrower, which can prove beneficial in acquiring loans for real estate, business equipment, etc.
2] Access to Larger Loans
With a secured loan, you are in a position to borrow the amount of money that will lead to the accomplishment of your business goals. The reason behind this is simple – lenders will gladly give you more money if you give them your precious assets! All the lender will require is that the collateral provided covers the amount of money borrowed. Typically, a good credit score and a solid business plan will get you a loan. The addition of collateral, however, makes all the difference. Just decide which asset you are willing to hand over, go to the bank, fill in the forms, sign over your asset, and you have your secured loan!
3] A Secured Loan Helps in Building Your Credit Score
Though using collateral to borrow a loan will put your assets at risk, paying off your debt within the agreed timeline will build your credit score. Note, however, that you need to plan the loan acquisition correctly so that there is sufficient cash flow to pay it off. Your assets, therefore, help in building your creditworthiness, which in turn creates confidence with lenders, resulting in lower interest rates over time.
4] Greater Financial Flexibility
Starting up a business and branching into new territories is a hard task that requires sufficient cash flow to ensure that business activities run smoothly. A secured loan will however reduce the financial pressure on the business, and give you the leeway to explore new opportunities. Your assets, therefore, act as an avenue through which you can access funds to push your business towards high-risk ventures that promise high returns.
5] Expanding Business Opportunities
Unlike unsecured loans, secured loans have low-interest rates with prolonged payment periods. A secured loan is therefore ideal for the business owner who is eager to expand his business and take it to new heights.
The secured business loan should be viewed as an opportunity for growth and development, rather than an obstacle. Just make sure you do your research on the lender before you dive in!
Give us a call today to find out how you can expand your business using our easily available secured loans!
