Farm Weekly

Grab business opportunities with the benefits of an unsecured loan

Grab business opportunities with the benefits of an unsecured loan

Story in partnership with Savvy.

Increased optimism in many regional areas has been driving a rise in the numbers of loan applications as more businesses seek to make the most of the good times and invest in their futures.

The agricultural sector in particular is taking advantage of a strong season and low interest rates with a big boost in spending to strengthen businesses for the long term, with lenders reporting surging loan applications for business asset investment.

But there are fears that many farmers and other regional businesses could be missing out on opportunities because the time to approve applications has ballooned.

Financial advisers are warning clients to prepare for finance for major purchases six months ahead.

However, one option for businesses keen to more quickly secure finance to grow their operation is to compare available unsecured business loans, which can often be a speedier alternative.

"Lots of different regional businesses are looking at ways they can invest in their business now to drive growth into the future and take it to the next level," said financial expert, Bill Tsouvalas, the CEO of Savvy.

"Using finance rather than savings for that new equipment or upgrade, maybe to hire more staff, makes good business sense - you're retaining cash reserves to provide much-needed liquidity in your business. And making use of an unsecured loan can be a faster and easier option to do that."

The benefits of an unsecured loan

An unsecured business loan is finance that doesn't require collateral and so is the most common for small businesses which are less likely to have the assets needed to secure their loan.

Unlike other kinds of business loans, an unsecured loan can be approved quickly, sometimes within 48 hours, with a process usually all done online.

Unsecured loans can be for as little as $5,000 up to a maximum of $500,000 in some cases, and come with potential loan terms of between three months and five years.

Grab business opportunities with the benefits of an unsecured loan

These days, there's increased competition in this market because of the numbers of new online lenders operating in the sector.

"The growth of these sorts of lenders have definitely reduced the barriers to entry and allowed small businesses to thrive by giving them access to credit when they need it," said Mr Tsouvalas.

Mr Tsouvalas said as long as businesses could demonstrate a sound business structure and had a good credit rating they were likely to gain approval for an unsecured business loan.

"These financiers would generally request three to six months worth of trading history to determine if an applicant qualifies," Mr Tsouvalas said.

"And applicants should be able to provide a clear explanation about the reason for the required cash - you need to have a good solid business plan."

Avoid the pitfalls

While an unsecured business loan can offer a valuable source of quick finance, businesses need to be aware of the risks and take care about how they use them.

They are a more expensive option - being unsecured you would likely be paying upwards of around 13 to 14 per cent on this kind of loan.

"An unsecured loan is one of the tools available for businesses but should be just a short-term solution to resolve immediate cash needs," Mr Tsouvalas said.

"Approach it in a very responsible and realistic way. Have a plan in place and pay it off. Avoid becoming dependent on credit just to pay your bills."

While the increased competition in this sector means lower rates for borrowers, it also creates the nightmare challenge of trying to sort through the many lenders and loan products, and then being confident about selecting the right one.

Seeking out an experienced finance broker is an ideal way to help you navigate your way, determine the kind of loan most suited to your situation and then secure the best deal for your business's future.

To take advantage of Savvy's services and find out more about how unsecured loans could help grow your business visit savvy.com.au

Story in partnership with Savvy.