
What Is an Unsecured Loan?
Any time you borrow money from a lender, there’s a risk that it won’t be paid back. To protect themselves from loss, lenders often require you to “secure” the loan with collateral. Common examples include vehicles, homes, or real estate. If you fail to repay the entire loan, the collateral goes to the lender to serve as compensation. With an unsecured loan, the lender doesn’t require collateral from you. The lender takes on more risk with this arrangement, and you don’t have to risk your personal property by tying it to the loan.
Using a Short Term Unsecured Loan
In addition to speed, these loans are also known for their versatility. In fact, there generally are no restrictions on the use of funds. Your short term unsecured loan can be used for a wide array of business purposes. Perhaps you’ve come across a business opportunity that requires fast action. Or you might use the funds to hire employees, bolster cash flow, or purchase equipment. The point is, you’ve got options.
Just remember that short term unsecured loans typically cost more than regular term loans. So it’s wisest to use them in situations where the faster timeline eliminates other options.
