If you’re the owner of a small or mid-sized business, congratulations! You’ve ventured into an exciting world that is filled with big rewards — and as you may have already discovered, plenty of challenges too.
An important part of unlocking the success of your business is understanding the ways in which you can secure funding, in order to gain growth. Commercial loans can be vital in kickstarting your businesses’ next big step. Most companies will reach a point where additional cash flow is needed or desired, to fund things like:
- Increase of inventory to prepare for sales seasons
- The opening of a new office to expand the organisation
- Recruiting new talent to build an experienced team
- Investing in new machinery to increase output
- Purchasing important training resources to upskill employees.
Increasing capital can open your business up to some strategic new opportunities. But figuring out where to procure a commercial loan can be a pretty overwhelming task. There are plenty of things to consider but a good place to start is getting a grasp of the various loan products available. Two common and beneficial options are secured and unsecured business loans, which both come with various advantages. Which one is right for your business will depend on how your company operates and where you need to utilise the funding.
So let’s go ahead and unpack the differences between secured and unsecured business loans, how to ascertain which funding will be best for your growth KPIs and how to go about committing to the best commercial loan for your business.
What is a secured business loan?
If your company has high-value assets, then you may be eligible to use them as collateral against a loan. Secured business loans are a great option for companies, keen to take the equity from their tangible and intangible assets, to raise additional capital.
People often wonder ‘what can I use for collateral for a business loan?’ When it comes to what kind of assets are considered, it will vary depending on the lender. At Aquamore, we offer your business the opportunity to acquire a secured business loan, by borrowing against your company’s real estate assets. This kind of commercial loan is widely considered an attractive funding option, because of the flexibility of the terms.
These advantages include:
- Lower rates due to the loan being borrowed against high-value assets
- Lengthier repayment terms for the benefit of your business
- The ability to take out larger loans (i.e. over $100K) compared to other loan products
- The option to use more than one high-value real estate asset to unlock multiple loans.
A secured business loan is more of a long-term investment for your company — using an asset as collateral could mean your risk pays off big time in the long run.
What is an unsecured business loan?
In short, unsecured business loans are available to companies that do not have assets to use as collateral. Typically, this kind of loan is ideal if your business is looking to increase cash flow and then pay it back in a short amount of time. As the interest rates on unsecured loans are generally quite high, you’ll find that the repayment time frame is typically shorter; anywhere from six months to one year. Fees and interest rates are never fun, but with these kinds of transient terms, it can result in decreased risk of long term financial burdens for your company.
An unsecured business loan can be a great option for companies in their early stages, that might not have a large number of assets in their portfolio or for those who have previously had credit issues.
How do I qualify for a small business loan?
Understanding that all businesses are unique also means understanding that unique solutions are required to tackle your objectives. This is where the experienced team at Aquamore can assist in ascertaining which kind of small business loan will be best suited to your company.
There are a number of requirements that will indicate whether or not your business will qualify for a loan. This will differ depending on each lender but you’ll qualify with Aquamore if:
- You are a commercial business looking for funding
- You have a high-value physical asset available to use as collateral against a secured business loan
- You are looking to take out a secured business loan between $100K and $5 million
- You can commit to a 2-24 month repayment window
- You have a strong credit history when applying for an unsecured business loan
The best way to get all the information around qualifying for a small business loan is to jump on the phone with one of our Aquamore experts on 02 9258 8888.
What kind of business loan is best for my business?
So, are business loans usually secured or unsecured? That is the million-dollar question — or $100K question if you’re looking to take out a small business loan! Often the most difficult decisions that arise when you’re a business owner are the ones that will have the most impact.
It’s important to consider all of the finer details when hitting “go” on a small business loan for your company. Making sure you understand the boundaries of your company will help you prioritise which investments are essential to the growth of your business.
We’ve had a good dig into the particulars surrounding secured and unsecured business loans, so let’s break it down with a summary for each of the options available through Aquamore.
Secured Business Loans:
- Offered to companies who have high-value physical assets to use as collateral
- Physical assets can be residential or commercial property owned by the business
- Low-interest rates
- No need to have a great credit score
- Option to take out multiple loans if your company has a number of physical assets to loan against
- Minimum loan size of $100K
- Ability to borrow up to $5 million
Unsecured Business Loans:
- Available to companies that do not have high-value physical assets to use as collateral
- Short-term loan
- Higher interest rates
- Great option for business without collateral
- Assets aren’t used as equity so less risk involved
As you take a look over the particulars for each loan product, it might be a good idea to write out answers to the following questions:
- Does our business own a residential or commercial property?
- How much money does the company need to borrow?
- Are we looking for a short or long-term loan?
- Are we willing to risk a high-value asset for collateral?
- How many loans do we want?
- What is our credit score?
- What kind of interest rates are we comfortable agreeing to?
- How quickly do we need the loan to be approved?
- Where do we want to invest the funding in our business and how will that lead to growth?
Of course, this list is just a jumping-off point — feel free to add in more business-specific questions that might be better aligned to your company. You’ll find that once you complete this exercise, you’ll have a lot more visibility on what kind of loan product will be the best fit for your business. These kinds of tasks can feel a bit arduous but ultimately your answers will provide you with the insights you need to take your business to the next step.
How quickly can I get secured business loans or unsecured business loans?
As a non-bank lender, we at Aquamore have the benefits of operating as a boutique enterprise, which means we offer exceptionally quick turnarounds. Once you’ve decided that a small business loan is the next step for your company (or if you still have some unanswered questions), an expert from our team would be happy to guide you through your options. After discussing whether you qualify for either a secured business loan or an unsecured business loan, we provide you a thorough timeline that will outline the entire process including interest rates, establishment fees, credit score, repayment terms and approvals — right through to loan disbursement. Our hands-on approach to commercial lending means we’ll be with you every step of the way.
How do I get an unsecured business loan or a secured business loan?
You’ve come to the right place — because here at Aquamore we’re dedicated to helping small businesses take their next step towards success. Whether you’re looking for secured business loans or unsecured business loans, we want to make sure all of your queries are answered — before you commit to a loan product for your company. We have a team of experts at the ready to assist you online. Or give us a call on 02 9258 8888 for a free, no-obligation quote.
At Aquamore, we pride ourselves on being the leading specialists in funding solutions for small and mid-sized business in Australia. We offer secured business loans for companies which have physical assets, for example; residential or commercial property, which can be used as collateral against the loan. As boutique lenders, we pride ourselves on making sure we provide you with a timeline that will outline the loan process from approval to fund disbursement. It’s important to note that we offer a minimum loan size of $100k and a 2 to 24-month repayment term. Our interest rates for secured loans start at 6% and we charge a simple 2.2% establishment fee. So get started on your business loan application today!