When you’re considering finance for your small business, one of the very first decisions you might make is whether you want the loan to be secured or unsecured. While this might seem like a big decision in itself, the choices don’t stop there. You see, regardless of whether the loan is secured or unsecured, you still have to decide what specific type of loan will best suit your business’ needs.
Today, we’re going to be delving into a topic we know best: unsecured business loans, as well as how you can choose the best unsecured loan for your SME. Keep on reading to find out what important factors you need to take into consideration.
How much you need to borrow
Each specific type of unsecured loan may vary in terms of how much you can borrow, so one of the most important things you can do is to sit down and determine exactly how much cash you need. One of the easiest ways to work this out is to simply think about what it is you need the funds for – i.e to hire more staff, purchase additional inventory, cover seasonal shortfalls, etc.
How quickly you need the funds
Once you’ve determined how much you ideally want to borrow, you’ll also want to consider how quickly you require the funds. Unsecured business loans are mostly offered through alternative lenders, so you should be able to benefit from their quick turnaround. For example, here at Lumi, we allow customers to complete their application online in as little as 10 minutes and they can expect to receive a lending decision within just 24 hours. If approved, a business owner can then have their funds deposited into their nominated business account as early as the next business day.
The interest rate of your loan is very important, as it will largely determine how much you will repay on your loan. Not only does each type of unsecured business loan offer a different interest rate, but each lender will also vary in the interest rate they can offer to you.
It also doesn’t hurt to shop around, as some lenders will offer more competitive rates if you do your research.
Usually, your lender determines your repayment schedule, however some may give you a choice of weekly, fortnightly, or monthly repayments. Lumi customers enjoy making weekly repayments, as it’s a smaller and therefore more manageable amount being deducted from their nominated account. Your lender should also be very upfront about your repayment amounts before you sign off on your loan. If you want to do the math yourself, you can crunch your figures in our very own loan repayment calculator.
If you qualify
Although we’ve left this one until last, it’s still one of the most important factors to consider before you begin an application for an unsecured business loan. Firstly, you don’t want to waste your own time, nor your lender’s. Double-check each of the loan requirements to ensure you qualify.
When considering an unsecured business loan, it’s vital that you take these 5 important factors into account first to determine which type is best for your SME.
Want to find out how an unsecured business loan with Lumi can help you? Visit our website or call 1300 00 LUMI today.