When you’re running a home business, you face just as many, if not more challenges than a workplace-based company. You still have bills to pay, inventory to purchase, and in many cases, staff wages to pay. But what happens if business is slow, causing your cash flow to dip? Can you apply for a business loan like any other enterprise?
You’ll be pleased to hear that the answer to this question is yes. The key to obtaining funding for your home business is through an unsecured business loan, which is offered by an alternative lender. Today, we’re going to tell you how an unsecured loan can help your home business.
Firstly, What is an Unsecured Business Loan?
If you haven’t heard of the term unsecured business loan before, then you’re in luck. This type of loan differs from a traditional, secured loan, as it is obtained without providing collateral. Collateral is a valuable asset that you use to secure the loan against, usually taking the form of an applicant’s home. With an unsecured loan, you don’t have to risk losing the roof over your family’s head, as the lender cannot seek repayment by going after your assets.
It’s important to note that you still need to meet income and credit requirements, and many alternative lenders ask for a personal guarantee from the directors of the business. The other important aspect of an unsecured business loan is that it is offered through a non-traditional lender. These lenders aim to make the loan application process quicker and easier for all business owners – including those who work from their home.
Here’s just some of the ways an unsecured loan can help your home business…
Increase Working Capital
The working capital you have on-hand helps you to manage your day-to-day expenses, including those unexpected costs that you simply haven’t budgeted for. Without sufficient working capital, your business won’t just find it hard to succeed, but may fail altogether. If the funds you have available are looking a little too low for comfort, then an unsecured business loan may be the solution to your problem.
Upgrade or Purchase New Equipment or Software
Does your home office have all of the equipment and software you need? Whether you’re investing in new stuff or need to upgrade something that’s just not working, an unsecured business loan can also come in handy for this.
Cover Cash Flow Fluctuations
Depending on what type of home business you run, you may experience seasonal fluctuations throughout the year. An unsecured business loan can provide you with a safety net to cover these cash flow fluctuations.
Buy Inventory or Stock
In order for your business to run smoothly, you’ll also need to have healthy supplies of inventory and stock. Without this, your business may quickly decline, so it’s vital that you keep on top of it. Funding from an unsecured business loan can quickly remedy this issue.
If you run a home-based business with employees, then this one might apply to you. Paying staff wages requires a healthy cash flow, something which isn’t always possible throughout the year. Rather than letting go of your precious employees, you can simply take out an unsecured business loan to cover their expenses (without cutting into your available working capital).
Advertising and Marketing Costs
Without investing in advertising and marketing, your business simply isn’t reaching its full potential, nor is it likely to grow. If you lack the funds to invest in these areas, then an unsecured business loan can also cover your cash shortfalls and help you out.
Don’t let a shortfall in working capital be the end of your business. As you can see, there are plenty of ways that an unsecured loan can assist your home business to thrive.
Author bio: Melanie Doncas is a content writer for Lumi, an Australian fintech specialising in unsecured business loans. She is passionate about helping SMEs, entrepreneurs, and startups to grow their business.