3 Profitable Reasons To Consider Unsecured Working Capital Loans

by | Feb 23, 2015 | Small Business Funding, Working Capital

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Small business owners who are not taking advantage of unsecured working capital loans are putting themselves at a great disadvantage. By depending on personal resources to pay for the operational costs of a business they will never truly realize the profits that are being generated.

Why Use Unsecured Working Capital Loans

Unsecured working capital loans are designed specifically to take care of the expense of running a business without risk of losing any of your business or personal assets. There are a number of financial obligations that need to be met every month with a small business that have little or nothing to do with how much profits were generated. These include expenses such as:

  • Utility bills – Electricity, water and gas.
  • Rent – If you do not own the space your business occupies, you are making monthly rental payments
  • Payroll – Employees still have to get paid, even if you are having a slow sales month
  • Vendors – Depending on the type of small business you have, there could be a need to consistently replenish certain stock items

If all of the business equity is tied up in the products, then there is no cash on hand to take care of these expenses. Instead of taking the money from your personal accounts or using assets to secure a loan, consider the benefits of unsecured working capital loans. These not only help with cash when you need it, they can set your business up for future where cash flow is never an issue again:

The Business Profits Will Always Be Yours – You are not losing a stake in your own business with unsecured working capital loans. If you look at an equity investor to resolve these monthly obligations, you are going to be giving up a percentage of your own company. Not only will that mean sharing in its profits, but you could end up losing full control over the way in which your business is being run. By using an unsecured working capital loan, you are able to continue to structure the small business the way you see fit to earn you the most profits and income.

There is no Long Term Financial Obligation – The shorter terms that come with unsecured working capital loans encourage you to pay them off as quick as possible so that your business forges forward without encumbering debts. A lack of working capital is typically a short term problem that occurs from a sudden slowing of sales. When you rely on a short term solution to resolve it, the debt gets paid back quickly saving you money in long term interest accrual. Plus, with no loans to pay off, there is more money at the end of each month to add into your profit line.

The Money Can Be Used to Increase Profit Probability – If your upcoming busy season is impending and you don’t have the working capital to prepare for it, you are going to miss out on earning a substantial profit. There are no restrictions on unsecured working capital loans, making it possible for you to take advantage of low prices on key products now, and earn larger profits from them during high volume sales months.

Not taking advantage of short term, unsecured working capital loans is doing your business and its profit earning capabilities, a grave disservice. Without any risk of losing your assets, you are setting up your business for a successful future when you borrow money on a short term basis to resolve those short term financial needs.