Kapital Connection | Unsecured Loan

Unsecured Loan

Unsecured Loan lenders don’t require any assets
(e.g., equipment or property) as security for the funds.

Unsecured Loans are provided by a wide range of traditional lenders, such as banks, and alternative lenders typically for one to three years.

Lenders will want to know what you are using the money for, e.g. hiring a new employee or entering a new market, and how it will benefit your business. Typically, unsecure loan is suitable for businesses that are more established and profitable.

Amount

Up to $500K

Funds can be in your account within a couple of days, subject to financial profile and affordability

Repayment

Repayment 1-3 years

Payment terms are usually between 1 and 3 years with fixed payments. Longer terms are subject to lender discretion. Less than 1 year is not common.

Rates

Rates 1.0-1.5% of finance amount per month

The rates charged depend on your financial profile and affordability

Advantages

Not Secured Against Assets

This type of business funding is not secured against a specific asset. It is, therefore, available for businesses that can meet the repayments but don't have assets to offer as security.

Quick Application Turnaround

Unsecured loan application turnaround time is faster than secured loans as there are no collaterals involved, so no need for time consuming collateral evaluations. Furthermore, the credit decision is solely based on your repayment ability and credit profile.

Disadvantages

Repayments May Be Higher Than Secured Loans

Because unsecured loans are riskier for lenders, they usually charge higher interest than secured loans. That means your business will pay more over the life of the loan than it would have paid for a secured loan of the same amount.

Harder to Obtain than Secured Loan

Lenders rely on your company’s credit profile to extend the credit facility without taking any asset as collaterals, which makes it much more vulnerable from credit security perspective. Furthermore, lenders typically require at least three years of operating history in order to consider for unsecured loans. In general, lenders tend to be choosier when it comes to unsecured loans.