Unlock Your Growth Potential: A Guide to Unsecured Business Funding

Introduction

Unsecured business funding is a double-edged sword that can result in the hypergrowth of your business by boosting your working capital. On the other hand, even after this boost, if you fail to convert it into tangible results, then this overwhelming debt will crush your company. Nevertheless, sometimes, getting credit from formal lending institutions is not possible due to varying reasons, and for that purpose, we have built this complete guide for unsecured business funding. The demand for unsecured business is rising quickly among Indian MSMEs, and in this article, we will give a complete guide for unsecured funding for businesses.

Types of Unsecured Funding for the Businesses

Various forms of unsecured funding are available to business owners, which they can leverage to grow their organization.

1. Business Line of Credit: With this type of funding, organizations will get access to credit just like a credit card! Multiple options in the market exist that provide such types of credit lines, such as CF Pay Later of CredFlow! Through this program, you can get a credit line of 15 Lakhs without any collateral required whatsoever. Therefore, you can ensure continuous growth month on month with an increase in the working capital.
2. Term Loans: With unsecured term loans, your business will get a complete lump sum amount without a requirement of collateral. Therefore, you can use this capital to buy equipment, grow business, etc.
3. Invoice Financing: You can also use your pending invoices and use them as collateral to get them encashed! Therefore, whatever your pending invoices are present for the later due dates, you can get their value instantly and manage your working capital seamlessly.

Benefits of Unsecured Funding 

Unsecured business funding can have several benefits for your business, which are as follows:-

• Speedy Approval and Disbursement: As mentioned above, unsecured funding has faster approval because it requires less documentation, and your sole criteria for creditworthiness are your business performance and creditworthiness. 
• Credit History Building: Through small repayments, you can build a credible credit history, through which you build your creditworthiness. So, with that said, you can get more favourable loan conditions from lending institutions. 
• Capital spending flexibility: One of the biggest advantages (if not the biggest!) is that unsecured funding is that you can spend anywhere you want! Therefore, if you want to inject more capital into your marketing activities or stock in more products — you can do anything because unsecured funding is flexible — you can utilize the amount as per your needs.

Things Need to Consider Before Unsecured Funding

There are multiple things we need to consider before getting into debt via unsecured business loans:

• Consider the Risk of Lending: Though unsecured provides a multitude of benefits, you should also consider the risk associated with this type of funding. If you are unable to repay the loan due to insufficient cash flow, you have to make a risk strategy for that scenario. Also, you can use software such as CredFlow that will help you manage your cash flow efficiently.
• Cost and Terms: Also, as mentioned, you have to think about the cost implications of the unsecured funding because, generally, they have higher interest rates, so manage this factor before getting unsecured lending.

Conclusion

Unsecured business funding can be the most impactful factor in your growth journey! It can help you build a good credit profile that can open more avenues of funding, thus allowing you to expand into different verticals.