A secured small business loan is a loan backed up by specific collateral and assets, so the interest rates and terms are likely to be more favourable for a borrower. Small business lenders also manage financial risk by charging interest across their entire loan portfolio.
Small business borrowers are always treated with suspicion, and the default position for most lenders is to reject loan requests at the earliest opportunity. If, as a small business owner and you want to take out a secured loan, a small business lender will secure your borrowing against collateral your business owns.
What is the Collateral for a Secured Small Business Loan
Anything property owned by the business owner that has monetary value, which can include
- Accounts receivable
- Business bank accounts
- Other assets that could be sold or claimed
Suppose the small business owner fails to make repayments over an extended period and defaults on the secured small business loan. In that case, a lender has the legal right to seize and sell the collateral to minimize losses.
Pros and Cons of Secured Small Business Loans
- Your business typically pays a lower interest rate on a secured loan and generally gets more favourable terms.
- Your small business can borrow larger amounts with a secured loan.
- The lender will clearly define any small business assets liable to seizure if you default.
- The lender will not be able to seize any assets not defined as collateral in your loan agreement.
- Secured loans are easier for small businesses to get than unsecured ones.
- Not every small business has defined collateral they can put up against a loan.
- The assets you put up as collateral are at risk if you fail to repay.
Secured Business Loans for Startups
Starting a small business can be a challenging but rewarding process. While great small business ideas and business plans are important, financing the business will remain the most critical element for business investors.
To finance a startup business is sometimes often difficult, especially in Africa. Startup capital is difficult for a small business owner to access for several reasons.
It’s not that financial institutions are against lending to a small business owner. Still, traditional financial institutions have an outdated, labor-intensive lending process and regulations unfavorable to small businesses. Digitization in the banking sector has done little to alleviate this problem.
The difficulty of accessing capital is worsened because many small business owners applying for small business loans are new. Financial institutions typically want to see at least a three-year banking history of a healthy business before considering a loan request.
Why Bizna Loans is the best Secured Small Business Loan for Kenyans
Bizna Loans is a special small business loan for Kenyans designed by Stanbic Bank Kenya and partners to provide affordable financing solutions to small business owners when needed.
The secured small business loan is designed with the needs of small business people to supply them with a short-term financing facility for working capital needs.
Bizna Small Business Loans features:
- Target: Micro and Small business
- Loan amount: 10,000 – 5,000,000
- Processing: 3-48 hours
- Security: Required
- Repayment: 1 – 6 months
Bizna Business Loans Types
A loan that is taken to finance a business’s everyday operations. Working Capital loans are not used to buy long-term assets or investments and are, instead, used to provide the working capital that covers a company’s short-term operational needs.
Asset finance is a loan to facilitate the acquisition of movable assets, such as
- Boda Boda (bicycles and motorcycle taxis commonly found in East Africa)
- Office furniture
- Motor vehicles
- Other business equipment
An interim financing option used by businesses to cover short-term financing needs as a long-term financing option is being explored or finalized.
A facility that enables businesses to service local purchase orders adequately. It ensures continuity of operations as immediate working capital needs are met.
An invoice finance facility is when a business’s unpaid invoices are used as collateral for a loan. It enables businesses to leverage the value of their outstanding payments.
A business line of credit
A revolving line of credit, so you can access the money as and when you need it, as often as required, rather than receiving a lump sum.
There’s no pressure to borrow the money, but it’s always there for business emergencies such as buying stock, paying outstanding invoices, taxes or salaries; you’ll only pay interest on the exact amount of money you use.
Bizna Secured Small Business Loans Requirements
Applying for business financing is a commitment that requires a good understanding of what the borrower is committing to. To increase your chances of getting a Bizna secured small business loan, you should understand the process and prepare adequately by following the five steps listed below.
Know how much you need to borrow upfront
You can apply for any amount between 10,000 and 5,000,000 from Bizna Loan. However, don’t borrow more than you need. If you need additional funds in the future, you can borrow again after you have repaid the current loan facility.
Write a business plan with financial projections
While getting a Bizna Loan is not required, it is important to prepare a business plan to have clarity of your business operations and the prospects of the business. It also helps you gauge the business’s capacity to borrow and repay loans.
Do market research and know the current trends of your industry
Bizna secured small business loans targeted at borrowers in growing and sustainable industries. Having this information demonstrates your knowledge as an entrepreneur and business foresight.
Avoid Credit Reference Bureau (CRB) listing
Being listed on CRB is indicative of bad borrowing history. Ensure that you are up to date with other loan repayments and if you are having difficulty paying, renegotiate terms with loan providers to ensure you remain on good terms.
Business registration and compliance
Many small businesses operate informally with little or no form of registration. It reduces your chances to transact as a business and access Bizna Loans. Obtain the necessary registration and comply with government and regulatory institutions to increase your chances to access borrow and increase your limits.
You can visit the Bizna Kenya loan website to enter your details to apply for a Loan with their Partner Lenders.
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