At its root, the core utility of an unsecured line of credit is its premier ability to satiate short-term cash needs. It just so happens that, unlike the case with large, established corporations with prodigious physical assets and a multitude of financial vehicles. Unsecured credit works especially well for SMBs (small to medium-sized businesses).
Benefits of Unsecured Credit
The chief reason why this type of credit works so well for small businesses is the lack of collateral necessary. Backing by physical assets is concomitant with secured credit. Often favored by large multinationals and corporations.
Another positive attribute is the interest rates associated with unsecured lines of credit. You do not want to be burdened with monthly interest payments that significantly hinder your ability to maintain positive cash flow.
The Ability to Increase Loan Amount
The revolving terms of the loan make it such that you can continue petitioning for more credit for as long as your business is in operation. It is more robust than a small business loan and can be used for many purposes. This is an essential aspect of maintaining the working capital necessary to help your company grow.
There Can Be a Delay in Repayment
This is certainly not true for traditional loans. In which the interest payments are due the very next month after you’ve received the payment. With an unsecured line of credit, you do not have to use it and worry about interest payments just because you’ve qualified and received it. You can hold the disbursement of the fund in abeyance until business requires you to use it. Interest payments are only due 30 days (usually) after you spend employ the credit.
As a small business, you cannot afford to be laden down with financial responsibilities. Especially given the competitiveness of the business space. To better navigate the world of finance, feel free to reach out to us at Fortis Funding.