Unsecured business loans tend to take the form of a business cash advance. These lenders normally serve small businesses who due to bad credit or lack of collateral, do not meet the requirements for other financing. These loans can be beneficial to small businesses who qualify for traditional financing but still prefer the fast cash and the freedom of flexible repayments.
Always remember two things when thinking about obtaining an unsecured business loan – your credit score and your income. Although it is possible to qualify without one or the other it is unlikely. Occasionally one will balance the other however, this will always be the lenders decision. A positive history of business credit will usually provide the highest chance of receiving the loan that you are looking for.
Unsecured business loans are ideal for paying off high interest debt with a fixed or variable rate along with a fixed monthly payment. Lenders handle these loans cautiously and tend to be more critical of your qualifications because there is nothing backing up the value of the loan. Due to the lenders high risk, these loans usually carry high rates (variable or fixed) and short terms. The fixed rate payments remain the same throughout the loan term. On a variable rate loan the lender will periodically recalculate rates, which can unpredictably rise or fall.
Here are some major tips if you are considering applying for an unsecured business loan.
Don’t forget to check the reputation of the lending company that you’re considering.
Take the necessary time to read and understand the Terms and Conditions of your lender. We understand that reading multiple pages of legal terms is not an enjoyable way to spend the evening. However, it is extremely important to make sure that everything stated is the same as what you have anticipated. If there are any discrepancies notify your lender immediately, and ask for an explanation.
Double check that there are no hidden charges or vague clauses in your contract.
And always be sure you take advantage of your business loan to grow your business. Use your loan to the best of your ability, and treat the money as if it was yours all along. Do not make the common mistake of receiving a loan, and deciding that widespread spending is the best solution to grow your business. This simply is a recipe for disaster.