{"id":2633,"date":"2020-03-20T20:12:19","date_gmt":"2020-03-20T20:12:19","guid":{"rendered":"http:\/\/localhost\/2020\/swoopMW20\/?post_type=knowledge-hub&#038;p=2633"},"modified":"2024-07-31T15:57:23","modified_gmt":"2024-07-31T15:57:23","slug":"unsecured-loan","status":"publish","type":"knowledge-hub","link":"https:\/\/swoopfunding.com\/za\/knowledge-hub\/unsecured-loan\/","title":{"rendered":"Unsecured loan"},"content":{"rendered":"\n <div class=\"faq-accordion faq-accordion1445\">\n <div class=\"card\">\n <div class=\"card-header\" id=\"heading01445\">\n <h5 class=\"mb-0\">\n <a class=\"btn btn-link\" data-toggle=\"collapse\" data-target=\"#collapse01445\" aria-expanded=\"true\" aria-controls=\"collapse0\">\n What is an unsecured loan? <\/a>\n <\/h5>\n <\/div>\n\n <div id=\"collapse01445\" class=\"collapse show\" aria-labelledby=\"heading0\" data-parent=\".faq-accordion1445\">\n <div class=\"card-body\">\n <p>An <a href=\"https:\/\/swoopfunding.com\/za\/loans\/unsecured-business-loans\/\" target=\"_new\" rel=\"noreferrer\">unsecured business loan<\/a> is a loan that doesn\u2019t require you to offer security (in contrast to a <a href=\"https:\/\/swoopfunding.com\/za\/loans\/secured-business-loans\/\" target=\"_new\" rel=\"noreferrer\">secured business loan<\/a>). Since these loans are not backed by collateral (assets that could be sold to cover the debt), they typically come with higher interest rates due to the increased risk for the lender. Additionally, the borrower is usually required to demonstrate an excellent credit history and strong cash flow projections.<\/p>\n <\/div>\n <\/div>\n <\/div>\n <div class=\"card\">\n <div class=\"card-header\" id=\"heading11445\">\n <h5 class=\"mb-0\">\n <a class=\"btn btn-link\" data-toggle=\"collapse\" data-target=\"#collapse11445\" aria-expanded=\"true\" aria-controls=\"collapse1\">\n Why choose an unsecured loan? <\/a>\n <\/h5>\n <\/div>\n\n <div id=\"collapse11445\" class=\"collapse \" aria-labelledby=\"heading1\" data-parent=\".faq-accordion1445\">\n <div class=\"card-body\">\n <p>Here are three scenarios where you might consider taking out an unsecured business loan:<\/p>\n<ul>\n<li>You want to borrow but don\u2019t have many tangible assets (e.g., you rent an office rather than own commercial property).<\/li>\n<li>You do have some valuable assets but prefer not to borrow more than their worth.<\/li>\n<li>You\u2019d rather not offer specific assets as security.<\/li>\n<\/ul>\n<p>An unsecured loan might be a good option if you need to borrow more than the value of your assets, if you would prefer not to provide security, or if you\u2019re a rapidly growing business that requires quick financing.<\/p>\n <\/div>\n <\/div>\n <\/div>\n <div class=\"card\">\n <div class=\"card-header\" id=\"heading21445\">\n <h5 class=\"mb-0\">\n <a class=\"btn btn-link\" data-toggle=\"collapse\" data-target=\"#collapse21445\" aria-expanded=\"true\" aria-controls=\"collapse2\">\n Pros and Cons of an unsecured loan <\/a>\n <\/h5>\n <\/div>\n\n <div id=\"collapse21445\" class=\"collapse \" aria-labelledby=\"heading2\" data-parent=\".faq-accordion1445\">\n <div class=\"card-body\">\n <p>On the plus side, <a href=\"https:\/\/swoopfunding.com\/za\/loans\/unsecured-business-loans\/\" target=\"_new\" rel=\"noreferrer\">unsecured business loans<\/a> are usually simpler and quicker to arrange than <a href=\"https:\/\/swoopfunding.com\/za\/loans\/secured-business-loans\/\" target=\"_new\" rel=\"noreferrer\">secured loans<\/a> because there is no need for the lender to inspect or value any assets.<\/p>\n<p>However, in the absence of security, the lender focuses more on your business\u2019s profile and may also review your personal credit history and assets. They need assurance that you can repay the loan if things don\u2019t go as planned. Unsecured lending is generally more expensive than secured lending due to the higher risk for the lender.<\/p>\n<p>For an unsecured loan, the lender may consider:<\/p>\n<ul>\n<li>Revenue and profit (in relation to the loan amount)<\/li>\n<li>Bank statements<\/li>\n<li>Filed accounts<\/li>\n<li>Trading history<\/li>\n<li>Payment history (e.g., late payments, court judgments)<\/li>\n<li>Directors\u2019 histories (lenders may ask for a personal guarantee)<\/li>\n<li>Forecasts and business plans<\/li>\n<li>Your clients\/customers<\/li>\n<\/ul>\n <\/div>\n <\/div>\n <\/div>\n <div class=\"card\">\n <div class=\"card-header\" id=\"heading31445\">\n <h5 class=\"mb-0\">\n <a class=\"btn btn-link\" data-toggle=\"collapse\" data-target=\"#collapse31445\" aria-expanded=\"true\" aria-controls=\"collapse3\">\n Is it suitable for an SME? <\/a>\n <\/h5>\n <\/div>\n\n <div id=\"collapse31445\" class=\"collapse \" aria-labelledby=\"heading3\" data-parent=\".faq-accordion1445\">\n <div class=\"card-body\">\n <p>Unsecured lending can be an appealing option for SMEs, particularly for smaller amounts, due to its straightforward nature and quick access to funding.<\/p>\n<p>The flexibility of repayment periods, which can extend up to five years, allows smaller businesses to address cash flow or liquidity issues promptly. Since your business is already operational, the lender will evaluate it based on your business prospects.<\/p>\n<p>However, for larger amounts (over R500,000), the rates for unsecured loans may be less competitive due to the higher risk assumed by the lender. In such cases, you might find short- to medium-term loans at lower rates.<\/p>\n<p>An unsecured loan is ideal for SMEs that need to borrow without providing security. If you are just starting up or lack assets to use as collateral, an unsecured business loan might be the best option for your needs.<\/p>\n <\/div>\n <\/div>\n <\/div>\n <div class=\"card\">\n <div class=\"card-header\" id=\"heading41445\">\n <h5 class=\"mb-0\">\n <a class=\"btn btn-link\" data-toggle=\"collapse\" data-target=\"#collapse41445\" aria-expanded=\"true\" aria-controls=\"collapse4\">\n Have you also considered? <\/a>\n <\/h5>\n <\/div>\n\n <div id=\"collapse41445\" class=\"collapse \" aria-labelledby=\"heading4\" data-parent=\".faq-accordion1445\">\n <div class=\"card-body\">\n <p>Unsecured lending encompasses a variety of financial products. Beyond short-term loans and \u2018term\u2019 loans (which include medium-term and long-term options), it also covers:<\/p>\n<ul>\n<li><a href=\"https:\/\/swoopfunding.com\/za\/merchant-cash-advance\" target=\"_new\" rel=\"noreferrer\">Merchant cash advances<\/a><\/li>\n<li><a href=\"https:\/\/swoopfunding.com\/za\/loans\/revolving-credit-facility\" target=\"_new\" rel=\"noreferrer\">Revolving credit lines<\/a><\/li>\n<li><a href=\"https:\/\/swoopfunding.com\/za\/knowledge-hub\/business-overdraft\" target=\"_new\" rel=\"noreferrer\">Overdrafts<\/a><\/li>\n<li><a href=\"https:\/\/swoopfunding.com\/za\/knowledge-hub\/business-credit-card\" target=\"_new\" rel=\"noreferrer\">Credit cards<\/a><\/li>\n<\/ul>\n<p>Additionally, you might want to explore the various types of <a href=\"https:\/\/swoopfunding.com\/za\/knowledge-hub\/working-capital-finance\" target=\"_new\" rel=\"noreferrer\">working capital finance<\/a> available.<\/p>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n \n <script type=\"application\/ld+json\">\n    {\n        \"@context\": \"https:\/\/schema.org\",\n        \"@type\": \"FAQPage\",\n        \"mainEntity\": [\n                                {\n                \"@type\": \"Question\",\n                \"name\": \"What is an unsecured loan? \",\n                \"acceptedAnswer\": {\n                    \"@type\": \"Answer\",\n                    \"text\": \"An unsecured business loan is a loan that doesn\u2019t require you to offer security (in contrast to a secured business loan). Since these loans are not backed by collateral (assets that could be sold to cover the debt), they typically come with higher interest rates due to the increased risk for the lender. Additionally, the borrower is usually required to demonstrate an excellent credit history and strong cash flow projections.\"\n                }\n            },                                {\n                \"@type\": \"Question\",\n                \"name\": \"Why choose an unsecured loan?\",\n                \"acceptedAnswer\": {\n                    \"@type\": \"Answer\",\n                    \"text\": \"Here are three scenarios where you might consider taking out an unsecured business loan:  You want to borrow but don\u2019t have many tangible assets (e.g., you rent an office rather than own commercial property). You do have some valuable assets but prefer not to borrow more than their worth. You\u2019d rather not offer specific assets as security.  An unsecured loan might be a good option if you need to borrow more than the value of your assets, if you would prefer not to provide security, or if you\u2019re a rapidly growing business that requires quick financing.\"\n                }\n            },                                {\n                \"@type\": \"Question\",\n                \"name\": \"Pros and Cons of an unsecured loan\",\n                \"acceptedAnswer\": {\n                    \"@type\": \"Answer\",\n                    \"text\": \"On the plus side, unsecured business loans are usually simpler and quicker to arrange than secured loans because there is no need for the lender to inspect or value any assets. However, in the absence of security, the lender focuses more on your business\u2019s profile and may also review your personal credit history and assets. They need assurance that you can repay the loan if things don\u2019t go as planned. Unsecured lending is generally more expensive than secured lending due to the higher risk for the lender. For an unsecured loan, the lender may consider:  Revenue and profit (in relation to the loan amount) Bank statements Filed accounts Trading history Payment history (e.g., late payments, court judgments) Directors\u2019 histories (lenders may ask for a personal guarantee) Forecasts and business plans Your clients\/customers \"\n                }\n            },                                {\n                \"@type\": \"Question\",\n                \"name\": \"Is it suitable for an SME?\",\n                \"acceptedAnswer\": {\n                    \"@type\": \"Answer\",\n                    \"text\": \"Unsecured lending can be an appealing option for SMEs, particularly for smaller amounts, due to its straightforward nature and quick access to funding. The flexibility of repayment periods, which can extend up to five years, allows smaller businesses to address cash flow or liquidity issues promptly. Since your business is already operational, the lender will evaluate it based on your business prospects. However, for larger amounts (over R500,000), the rates for unsecured loans may be less competitive due to the higher risk assumed by the lender. In such cases, you might find short- to medium-term loans at lower rates. An unsecured loan is ideal for SMEs that need to borrow without providing security. If you are just starting up or lack assets to use as collateral, an unsecured business loan might be the best option for your needs.\"\n                }\n            },                                {\n                \"@type\": \"Question\",\n                \"name\": \"Have you also considered?\",\n                \"acceptedAnswer\": {\n                    \"@type\": \"Answer\",\n                    \"text\": \"Unsecured lending encompasses a variety of financial products. Beyond short-term loans and \u2018term\u2019 loans (which include medium-term and long-term options), it also covers:  Merchant cash advances Revolving credit lines Overdrafts Credit cards  Additionally, you might want to explore the various types of working capital finance available.\"\n                }\n            }          ]\n    }\n    <\/script>\n \n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":52,"menu_order":13,"template":"","segment":[295],"class_list":["post-2633","knowledge-hub","type-knowledge-hub","status-publish","hentry","segment-business-loans"],"acf":[],"featured_image_urls_v2":{"full":"","thumbnail":"","medium":"","medium_large":"","large":"","1536x1536":"","2048x2048":"","image_blog":"","image_podcast":"","image_banking":"","image_blog_internal":"","image_blog_medium":"","image_single_banking":""},"post_excerpt_stackable_v2":"<p>What is an unsecured loan? An unsecured business loan is a loan that doesn\u2019t require you to offer security (in contrast to a secured business loan). Since these loans are not backed by collateral (assets that could be sold to cover the debt), they typically come with higher interest rates due to the increased risk for the lender. Additionally, the borrower is usually required to demonstrate an excellent credit history and strong cash flow projections. Why choose an unsecured loan? Here are three scenarios where you might consider taking out an unsecured business loan: You want to borrow but don\u2019t&hellip;<\/p>\n","category_list_v2":"","author_info_v2":{"name":"edwardz","url":"https:\/\/swoopfunding.com\/za\/author\/edwardz\/"},"comments_num_v2":"0 comments","_links":{"self":[{"href":"https:\/\/swoopfunding.com\/za\/wp-json\/wp\/v2\/knowledge-hub\/2633","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/swoopfunding.com\/za\/wp-json\/wp\/v2\/knowledge-hub"}],"about":[{"href":"https:\/\/swoopfunding.com\/za\/wp-json\/wp\/v2\/types\/knowledge-hub"}],"author":[{"embeddable":true,"href":"https:\/\/swoopfunding.com\/za\/wp-json\/wp\/v2\/users\/52"}],"version-history":[{"count":0,"href":"https:\/\/swoopfunding.com\/za\/wp-json\/wp\/v2\/knowledge-hub\/2633\/revisions"}],"wp:attachment":[{"href":"https:\/\/swoopfunding.com\/za\/wp-json\/wp\/v2\/media?parent=2633"}],"wp:term":[{"taxonomy":"segment","embeddable":true,"href":"https:\/\/swoopfunding.com\/za\/wp-json\/wp\/v2\/segment?post=2633"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}