Thursday, 23rd December 2021 | Small business financing Canada
Benefits of secured loans for your small business
Secured Loans for small businesses are a great way to set up assets, equipment, hire staff and manage finances. Read all about the tremendous benefits of secured loans.
What are secured loans?
A secured loan for small businesses is secured by an asset you own, such as equipment, vehicles, or real estate. The lender has the authority to seize that item as payment if the loan defaults and you are unable to repay it. It provides them with a level of protection, allowing them to claim the collateral if you default on your monthly payments. Given these company loans are less hazardous for the lender, the interest rate is often lower and the loan is easier to secure.
Benefits of secured loans for your small business
Lower interest rates
A secured loan for small businesses provides lower interest rates than other types of business loans such as:
- Business loans with no collateral
- Loans where credit cards are accepted
- Lines of credit for businesses
This is because having secured collateral minimizes the lender's risk. Some of the rates are as low as prime +1%. A secured loan for a small business may be a suitable alternative for you if you want to avoid paying excessive interest rates.
Longer repayment terms
Secured loans can have lengthier payback durations, up to 30 years in some cases. Your company loan lender will determine conditions depending on your unique circumstances. If you can't pay back a loan in a short period, a secured loan for a small business may be a good option.
Faster processing
If you want funds immediately, a secured company loan might assist you in obtaining the funds you require. Given that lending money has a lower risk for the lender, lenders are more willing to offer you the loan. When it comes to unsecured company loans, the qualifying requirements are usually strict. As a result, the time taken by the lender to examine the company loan eligibility is extremely lengthy. If you apply for a secured loan, however, you will receive the loan amount sooner since the lender will just need to assess the market value of the collateral before approving the loan.
Higher capital amount
The value of the collateral has a significant impact on the loan amount of a secured business loan. Even if your company is just a year old or has a low net worth, you can still acquire a large business loan provided your loan collateral is valuable. Your creditworthiness is improved by loan collateral.
Uninterrupted ownership on the collateralized property
The nicest thing about secured loans is that the borrower may still use the collateralized property. The borrower must provide the property's mother deed to the lender to obtain the loan. However, the property can be utilized as it was before the loan was approved. One can, for example, continue to reside in the house that was used as collateral for a loan. However, if the borrower fails on the loan, the residence must be evacuated.
Secured loans for small businesses with iCapital
A secured business loan has various advantages, but it is essential to remember that it also presents a risk to your asset. It is necessary to be cautious when repaying a loan, as failure to do so may result in your asset being taken away from you. If you've applied for a secured loan for a small business, you'll need to stick to a strict repayment plan. Contact iCapital at 1.877.251.7171 for easy business loans for small businesses.
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