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February 28, 2024
Unsecured Business Loans Canada | Merchant Growth


Your business needs capital to continue to grow, and now you’re investigating your options in order to find the right funding structure for your small business. One of the major points to consider is whether a loan with or without collateral is the best option. Learn more about the differences between an unsecured business loan and a secured business loan and how Merchant Growth can help you with our quick and convenient financing solutions.

What is a secured business loan?

With a secured business loan, if a borrower defaults, or in other words, cannot pay back the amount of money borrowed, the lender can repossess the collateral and sell it in order to cover the value of the loan. What can be used as collateral is also directly connected to the industry in which the business operates.
Here are some examples of collateral that can be used for a business loan:

Physical assets:

  • Equipment: Machinery such as tractor, forklift, refrigerator, fabricating machinery, POS systems, etc.
  • Vehicle: Car, truck, delivery van, food truck, etc.
  • Inventory: Clothes or other retail stock, automotive parts, raw materials, etc.
  • Property: Location that your business owns, such as a storefront, warehouse, or any other facilities, etc.

Non-physical assets:

  • Accounts receivables: Signed contracts on sales that have been made for funds that are owed to your business by customers.
  • Assets currently held in the bank: While it may seem obvious, you can use existing funds that you have as a form of collateral

 

What is an unsecured business loan?

In contrast, an unsecured loan offers funds without a business having to put up collateral for those funds.

Advantages of unsecured business loans

Additionally flexibility:

In addition to not needing collateral to qualify for funding, an unsecured business loan offers a faster application process because you don’t have to prove the value of the assets. With funding from Merchant Growth, you can even get funds in as little as 24 hours. Furthermore our application is fully online, meaning that you can complete it whenever you want, from anywhere that is convenient for you, without having to go in person to a bank and wait to hear back from them.

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Qualification

With an unsecured loan, we look at the “whole picture” of your business in order to help determine the amount of funds your small business can qualify for. This can include:

  • History of the business (existing ownership, current ownership, etc.)
  • Monthly revenue
  • Credit score
  • Frequency of deposits
  • Where or not your business has previously received funding
  • Any outstanding balances from previous funding
  • Number of locations you own or operate
  • Your business’s online presence, such as a website and social media profiles

Additional points to consider when it comes to unsecured business loans

Cost

Precisely because there is no collateral involved, the cost of an unsecured business loan will likely be higher than that of a secured business loan.

Personal guarantee

Although there is no collateral involved, it is common practice for business owners to provide a personal guarantee when getting funds.

 

 

What type of unsecured business loans does Merchant Growth offer?

Here at Merchant Growth our three types of financing include:

Term Financing

Similar to a traditional business loan, term financing can help businesses improve their cash flow by providing an immediate injection of funds based on future credit and debit card sales. As with all of our financing options, no collateral is required and businesses can take advantage of flexible terms that take into account your business’s cash flow.

Business Line of Credit

A business line of credit is a revolving credit facility where you only pay interest on the amount that you withdraw. Using a business line of credit from Merchant Growth helps you access the funds that you need without having to max out or simply over-rely on your business’s.

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E-commerce Funding

With E-commerce funding, your online business can get access to the funds it needs to continue to grow. This can include buying inventory, increasing ad spend, operational costs, and more. As e-commerce platforms rely on credit card sales as the primary form of payment, we simply debit off of sales that go through your card processor.

What can you use an unsecured business loan for?

Our funding is unrestricted, meaning that you can use it to meet whatever your business’s particular needs are. Some examples of common uses of funds include:

  • Cash flow: Cash flow is a major challenge that many businesses face, including profitable ones. Whether it’s due to less frequent deposits, waiting to get paid on existing sales, extra funds can help bridge that gap.
  • Expansion: Business growth is great, but it often requires additional funds to put plans into action. So whether you’re opening an additional location, expanding or renovating your current spot, or perhaps adding a patio to maximize your space, an injection of additional capital can help make that happen.
  • Purchasing inventory: Having the right type of inventory in addition to the correct quantity to keep up with demand and seasonal variations often means planning ahead and, when possible, taking advantage of a promotion your distributor is offering.
  • Hiring: Whether you’re hiring additional team members for your busy season, you need more staff for a new location that you’re opening, or your business is simply growing, additional funds can help cover the cost related to those extra team members.
  • Marketing: You offer a great product or service, but you’re in need of getting your company’s name in front of more customers to help continue to grow operations. Whether it’s for boosting your online presence, or investing in local marketing such as flyers or print ad placements, use the funds to get more eyes on your brand!
  • Emergency funds: Even if you have some money set aside, sometimes the unexpected still happens, and sometimes it costs more than you could have anticipated. Immediate access to funds can mean avoiding shutting your business down or missing out on additional contracts, whether it’s for sudden damage or repairs, or any other situation that adds an additional urgent financial strain to your business.
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Unsecured business loans Canada: Getting started today

If an unsecured loan is the right choice for your business, and you’re ready to get started, there are a few things that can get organized on your end in advance, or ensure you have easy access to, in order to help streamline the process even more.

This can include:

  • Relevant financial statements, such as monthly bank statements, major contracts
  • Proof of ownership
  • Lease or deed to any physical spaces you rent or own
  • Tax documents
  • Business plan

Remember that for any business applying for financing with Merchant Growth, our minimum requirements are:

  • Be located in Canada
  • Monthly revenue of $10K
  • Time in business: 6 months

We invite you to apply today and get the funds your business needs for its ongoing growth!