As discussed previously in many of our posts, you will usually need a security to provide to your lender before they grant you business loan. Security often comes in the form of an asset – property. However, like everything in life, businesses also encounter unexpected turns. At one point, you might be faced with the dilemma of needing to sell your asset used for loan security. So, what can happen? We talk about that in the succeeding sections.
Fortunately, needing to sell your asset used for loan security is not a strange thing. Many people have done and so can you but so long as you can arrange things properly. You can sell your asset and most lenders will agree provided:
You sell the asset but repay the business loan – your asset assures lenders that any unsettled repayments can be covered by the security. If you take that away, you take that guarantee so your next best option is to settle the business loan.
Offer another asset to secure the loan – if you are selling to buy a new asset then lenders can allow the new asset to substitute the old one. You may need to complete further documentation to push through with this.
Sell your asset then use cash for loan security – if you want to sell but have no other asset to be used as a replacement, you can use the money from the asset sale.
Handling business loan securities can be a hassle if your business runs into unanticipated hurdles. If you want a more hassle-free option, then why not try an unsecured business loan. Gapcap provides a range of funding options with easy terms and fast approval. Check out our website for more information.