All secured business loans are secured against a collateral. In the event that the business is unable to fulfill its loan repayment obligations, MoolahSense will be able to sell or receive payment on the collateral and make repayments to Investors.
As a mandatory requirement, the financial value of the pledged collateral must be greater than the total loan amount that the business wishes to obtain.
For unsecured business loans, it is not pledged against any physical collateral. While not technically a collateral, directors of the Business are required to provide personal guarantees on their loan.
In invoice financing, no assignment or transfer of the invoice is carried out. Instead, the invoice provides an indication that the SME is likely to receive an inflow of cash (i.e. the payment from the SME’s customer) on the payment date of the invoice, which will in turn provide cash for the SME to repay the invoice financing loan. Moreover, the directors of the Business are required to provide personal guarantees on the financed invoice.