Shared Secured Loans Help Your Company Build Credit
If you would rather not touch the money in your savings account, but need capital, consider a share secured loan. You put money on deposit in an insured savings account or savings certificate at the credit union servicing your loan, and that money stays “frozen” until your loan is paid down. Share secured loans are also a good way to build a credit record to support future borrowing.
Small businesses and startups take time to build up credit, just as young individuals do. However, one’s credit is a huge determining factor in many loans and business dealings. Some companies cannot even order weekly supplies or set up services without first establishing good credit. Consumers may draw from a secured line of credit in order to build their score, and small businesses have a similar option, referred to as a share secured loan.
A Share Secured Loan Uses Your Business Savings as Collateral
While traditional banks provide savings accounts, credit unions offer share accounts. The terminology is different, simply because credit unions are a co-op, and they serve their members. If your business needs to build credit, or if you have money in your account that you’d rather let grow, you can put your existing capital to work by using it as collateral against a share secured loan.
Share Secured Loans are Versatile
You can use the borrowed funds for most anything, and the amount available will vary widely. It can help you secure supplies or equipment, help cover operating expenses, and more.
A Share Secured Loan Has Many Benefits
While the biggest benefit is that borrowing in this manner will help your company establish better credit, there are many ways it can help.
Low Interest- Because the funds you borrow are backed up by your own funds held at the credit union, interest rates tend to be much lower than those offered with other types of loans.
Easy to Qualify- Businesses that have not yet had time to establish credit, and even those who have struggled, have a much easier time qualifying for this program versus other forms of lending.
Simple Terms- There aren’t any surprise expenses, and you can budget for a regular monthly payment. Moreover, there are many options for the length of the repayment terms, so you can take longer to pay off bigger loans.
Tax Deductions- Some of your payments may be tax deductible as operating expenses, though it’s wise to verify what you can claim with your tax specialist.
Share secured loans are an excellent option for growing companies. At Business Loan Connection, our partner credit unions are experts in helping small businesses like yours succeed. If you have questions, reach out to a dedicated specialist at the location nearest you, or if you’re read to apply, simply begin by completing our no-obligation application online.