The bankers who coined the term unsecured working capital did so with their self-interest in mind (yes, contain your amazement), because the “unsecured” part is, frankly speaking, a bogus distinction.
ALL working capital loans are secured in one way or another, which means that, essentially, there’s no such thing as a true unsecured loan.
And so, the dichotomy is not – and should never have been – whether a loan is secured or unsecured, but rather WHAT is securing a loan. This is a line of inquiry that banks don’t want their customers to explore, but that we’re happy to bring to light. Knowledge is power!
How banks secure loans
Banks secure loans by putting 100 percent of the risk – or actually, more than 100 percent of the risk – onto their customers by demanding collateral.
The reason we say this is that banks can often under-valuing collateral. So, equipment that is easily worth $50,000 on the market may be “evaluated” by banks at $35,000.
The end game here for banks isn’t to take possession of these assets. However, if it becomes necessary to do so, they definitely want to be more than covered so that they don’t just break even, but actually turn a profit.
How Mulligan Funding secures loans
At Mulligan Funding, we secure loans as well – but NOT by forcing our customers to pledge (or rather, over-pledge) their business and personal assets.
We secure our loans based on the character of our clients, the appropriateness of their requested loan amount (unlike some companies we don’t want our clients borrowing more than they need), and how their business is on track for future success. As such, we don’t turn away clients who have bad credit or a bankruptcy in their past, nor do we require years of credit history. A few months is all that our experts need to see in order to know if the relationship is going to work.
For convenience, we’ll keep calling our loans “unsecured working capital loans” – because that’s the term that most people understand and use.
However, now you know that ALL loans are secured. Some lending partners – like banks – choose to secure their loans by placing 100% (or more) of the risk on borrowers. Other lending partners – like us – choose to share the risk, because we believe that’s what a partnership is all about.
Call Mulligan Funding at 855-326-3564 to discuss your financing options today!
The information shared is intended to be used for informational purposes only and you should independently research and verify.
Note: Prior to January 23, 2020, Mulligan Funding operated solely as a direct lender, originating all of its own loans and Merchant Cash Advance contracts. From that date onwards, the majority of funding offered by Mulligan Funding will be by Loans originated by FinWise Bank, a Utah-chartered Bank, pursuant to a Loan Program conducted jointly by Mulligan Funding and FinWise Bank.