If you have to choose between secured or an unsecured funding option, the smart money would go with the unsecured option. Secured and unsecured funding is the two most popular funding options, they both offer to fund when you need it BUT it is in the terms that they differ.
Secured loans require collateral. Collateral are items that are equal to or greater than the value of the loan. There is a reason that secured loans are called “secured” because if you should default on the loan your goods are taken in lieu of the payment and sold off to pay off the loan. Secured loan situations can be very messy and they typically take longer for approval than unsecured lines of credit.
It is clear why so many business owners opt for unsecured loans to meet their immediate financial needs. Typically these loans are delivered in the form of a credit card or a line of credit. It is an easier approach to finding the money that you need when you need it without the headaches of dealing with a secured loan. Unsecured loans are a great way to get the funding you need without having to put up:
- Your office space (yes this is often used as collateral for secured loans)
- Office equipment
- Company car
- Other hard assets
The Better Option
Secured loans not only require that you put up collateral but there is also a lengthy approval process in place as well which can of course delay you from getting the money you need and actually set you up for failure. An Unsecured Line of Credit is the perfect financing vehicle for any growing business to make sure you make payroll on time, pay your vendors on time, or increase marketing to bring in more business.
With a credit line or a credit card, you do not have to put up your goods AND you only have to pay for what you use. Typically, secured loans are for one lump sum, they are not revolving which means you can only really use them one time. Secured loads are a lot of work and risk for a minimal amount of reward. Credit lines and credit cards are revolving lines which mean you can use them over and over once you have them in place without the lengthy waits and application process.
The Credit Care Program can help you to take advantage of an unsecured line of credit!