Unsecured working capital refers to short-term financing provided to businesses without requiring any collateral. These loans are typically used to cover daily operational expenses, such as inventory, payroll, or utilities, ensuring smooth business operations. Since there is no collateral backing the loan, lenders rely on the business's creditworthiness, cash flow, and financial history when approving the loan. Unsecured working capital loans often have higher interest rates due to the increased risk for lenders, but they offer businesses quicker access to funds and more flexibility in managing their working capital needs.
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