Secured vs Unsecured: Getting the Right Loan
Funding a business is oftentimes the most difficult part of getting started on your own. Though everyone dreams of the angel investor, the reality is that many people simply do not have access to this type of contribution. Instead, the best approach for most new businesses is to look at securing the best business loans to ensure they can get started.
What is a Secured Loan?
A secured loan is a type of loan you can receive by putting up some of your assets as collateral. This could include a car that you have already paid for, your own home, a boat or any other asset that might be worth a considerable sum of money. The advantage of a secured loan is that people with poor credit can often get more money than they would otherwise. The disadvantage is that, should you fail to pay, your property can be repossessed.
What about Unsecured Loans?
An unsecured loan works a little differently than one that is secured. Instead of putting up collateral, you simply use your good credit to receive a loan amount fitting to your needs. The clear advantage here is that no property is on the line. The disadvantage is that you often will not be able to get as much funding with this type of loan.
Funding Your Business
Ideally, a new business owner will look at getting an unsecured loan when starting out. If you have a strong enough credit score, you can go into a new business endeavor without putting up any of your existing assets as collateral. On the other hand, even with a good credit score your funding requirements may be too high for you to qualify for this type of loan. When that occurs, it is important you weigh the costs and ensure that you can move towards your desired outcome of business success.
As a Boston business attorney will tell you, either type of loan will be reported to the appropriate credit bureaus if you fail to keep up with payments. The ultimate difference simply rests in whether or not you have your own assets backing the loan. When you find that you have questions about the different business loans available to you and wish to consult with a Boston business attorney on ways to ensure you get the best funding opportunities, contact Jeffrey Cymrot of Sassoon & Cymrot for individual guidance and consultation.