Unsecured Funding

Unsecured loans and lines of credit can provide funding for your personal needs or starting and growing a small business. However, before seeking funding, be sure to understand how these sources of funding work and how they can help.

A personal line of credit is a form of unsecured personal loan, in which a bank approves you for a maximum amount of funding that you can draw upon as needed. Interest accrues only on the portion of the line that you have drawn, and you are responsible for repaying only the portion of the line that you use.

A credit card allows you to borrow money you need as you need it. Once approved for a credit card money can be available instantly.

Unlike with a secured loan, such as a mortgage, unsecured loans and lines don’t require you to pledge your personal or business assets as collateral. While lenders can seize collateral if you default on a secured loan, a lender can’t take your property in connection with a default on an unsecured business loan.

However, lenders take greater risk with unsecured loans and lines of credit than with secured funding, as they don’t have collateral to attach if payments aren’t timely made. Because lenders take more risk with unsecured funding, you may also see higher interest rates than with secured funding. In the case of nonpayment, lenders can take legal action against you, including garnishing your wages or reporting to your credit.

Your credit is the most important factor in determining your eligibility for unsecured funding. If you have good credit, you’re likely to benefit from lower interest rates upon repayment and more funding options. Getting an unsecured loan when you have bad credit may be challenging, but it’s not impossible. You may use a credit partner or Co-Signer to strengthen your application and lead to loan approvals. Also you can borrow and repay even small amounts of money with financial institutions and do credit repair to rebuild your credit quickly.