Archive for January, 2012

Unsecured business loansUnsecured business loans has turned out to be a great benefit for businesses and almost all new businesses rely on these loans. This is because of the fact that these unsecured business loans are an ideal source of capital and the borrower does not need to put collateral for getting the loan. These are particularly advantageous in situations where you do not have a property to put against the loan and still wish to carry out the business plans that you formulated. These unsecured business loans make a great option considering the fact that every business has an uncertainty element in them and it is possible that you make large profit and at the same time could witness bigger losses in another month. They can also be used as a source for purchasing fixed assets involving large investments be it for a new business or for expanding an existing one.

Specifically designed for people in UK, the unsecured business loans are meant to meet the capital requirements of the needy businessmen and they offer a certain level of flexibility to the person and the best part is that the loan can be used for any purpose. The purpose anyhow various in each case and the most commonly seen scenario’s include investing for starting business, expansion of a business, financing assets or equipment purchase and finally to restructure finances. Since there is no risk of repossession, you can get hold of these loans and kick start your business without having to worry about the capital or how to repay them. Without any property as collateral, the lender is at great risk and usually the lender takes real good time to review to borrower to estimate his repayment capability and confirm the scope of getting back his investment.

Planning of unsecured business loans

The plans are flexible in the unsecured business loans and you can repay them in a period ranging from 5 to 25 years based on the amount you borrowed. Anyhow, the business will have enough time to get established and make profits to repay the loan. Greater rate of interest is something associated with these kinds of loans and the reason is obvious. Absence of security puts the lender in a hard position and he can decide on the interest based on the repayment capability of the borrower. You need to be aware of the fact that these loans should only be taken on an event off emergency or when you find yourself in tough positions.

The quick and fast flow in unsecured business plan is facilitated after the borrower has been reviewed for his cash flow, income and expenditure on the business as well as the credit score and goodwill of the borrower. Even a poor or bad credit history is not barrier in getting an unsecured business loans but convincing the lender is important. Be it a short or long term use, you can always resort to these loans and remember to check for any hidden expenses in the program as different lenders have a different set of terms and conditions. So summing up, the unsecured business loans features some great advantages like flexibility, retention of ownership, better management of finance, expanding a business as well as the tax advantages which need not be pointed out.

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UNSECURED BUSINESS LOANSUnsecured business loans can help you set up an entirely new business. Businesses usually require smaller financial aid for small expenditures cropping every now and then. Unsecured business loans are collateral free, making them completely risk free. Here you do not offer any security to the lender but then you are entitled to pay back the loan within time. You are required to show documents pertaining to your business like past tax records and bank statements to the lender. The lender will also assess your business for its prospects of generating income as well.

This could be understood with the help of an example. If you have made ten different investments in different fields and even if any two of your investments are yielding negative returns and affecting the overall growth of your business, you should think about the viability of those investments. You can either totally dissolve those investments or you can take steps to convert them into profitable investments. The latter may require some more funds and investments. Here, unsecured business loans comes into the picture since these loans are fully compatible with the urgent requirements of any business.

Unsecured business loans can be helpful in initiating a new business project, expanding into the overseas market, increasing your areas of operations, increasing the productivity by installing more capital assets. The lenders perceive bad credit loans as risky propositions and so in such cases, loan is granted at a higher rate of interest which helps the lender to cover the entire risk. Unsecured business loans makes the money available sooner as compared to secured business loan since it does not involve the lengthy process of verifying the value of collateral but at a high rate of interest.

When you start up a new business, you lack business financial statement which is a proof of your capability to repay the loan. Therefore, you need to design a well organized business plan proving that no risk is involved in lending money to an individual and timely payment is ensured. Entrepreneurs running established business and who need funds for expansion can also apply for unsecured business loans and continue using the property or the equipment against which the loan is borrowed.

 By applying for an unsecured business loans, a borrower can get the following benefits:-

  1. Retention of the Ownership – An entrepreneur can retain the current ownership in his company instead of raising funds by selling interest in his company to an outsider.
  2. Cash Flow management- Unsecured business loans provides borrower an access to capital with minimal up-front payments and the flexibility to design a loan repayment schedule suitable to your finances.
  3. Tax Advantage- Interest on the loan is tax deductible thus helpful in saving hard earned money of the borrower.

In the unsecured business loans, you can either choose to pay a fixed interest rate or variable interest rate on the amount borrowed. In a fixed rate business loan, the interest rate applied to the outstanding principal remains constant for an agreed period that may be the loan term. Variable interest rate imply that rate of interest on the loan is not constant and fluctuates to common standard rate. Higher interest rate could be of concern to the loan seekers but then one can compare and apply to different unsecured business loans providers on internet for availing loan on comparatively easier terms and settle down for the lender of comparatively lower interest rate.

The lender is entitled only to the interest on its loan and so you are not liable to pay any percentage of the profits or a share in the company that an investor would expect. In case of an unsecured business loans, absence of collateral makes it necessary for a lender to recognize or identify the credit worthiness of the borrower to avoid any default by the borrower in the future. Higher the credit score (600 to 620), higher is the possibility of getting a cheap and fast loan. On the contrary, bad credit business persons too are eligible if they convince the lender the timely return of their loan through a convincing repayment plan along with your income sources and bank statements and the information pertaining to the business in which you are investing.

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business loansMany a times we come across cases of business loans where people find it hard to pay it off due to several different governing factors associated with the business. Apparently there is one provision that many of these small businesses are unaware of which could help them get through such hard situations. For instance, if you have received an SBA loan from a local banker, you can always opt for a stabilization loan in times when you are having a hard time making repayment. But then, this is limited to specific situations and is not made available to every other business owner out there who is having trouble with their finances.  In loans, generally a line of credit phenomenon operates which is pretty much like the functioning of a credit card. You can apply for the business loans line of credit and after analyzing your various aspects and after judging your qualification, your request is approved for a specific amount.

The best part is that you are not charged for the loan until you use the money for any purpose and the charges apply only to the money you use. With interest rates as that of a traditional loan, the line of credit facility requires no assets to be provided as guarantee just as in an unsecured loan scheme. The credit rates on the other hand can vary as the period of loan varies and your monthly payments are usually seen to be just a little more than the interest rate. While some people might consider that to be a boon, although in such situations the payments will be high towards the end of the payment period to ensure that the loan is completely paid back.

Not every loan lender will be willing to provide bad credit business loans and hence make sure you keep track of your credit score and maintain it at an acceptable level. The loan lender judges you by this credit score and is usually calculated with different statistical methods. Once you have a good idea of the credit score scheme, you can start concentrating on the business budget because the sum that you are planning to borrow is crucial in bad credit business loans. Unless you have a good plan and proper use for the money well accounted for never go for the loan because this is something that you need to keep as last resort when you are going through terribly bad times.

Business loans are available as secured as well as unsecured business loans and each one have their own benefits. Secured business loans for instance have lower monthly payment and are hence considered as the simplest and most efficient way of financing your business in a risk free manner. Moreover it comes with an option to borrow more money and you can also extend the repayment period of the loan to certain extend. So in a way it is a flexible and great plan for business to conserve your capital. When you are the one deciding the repayment schedule, you can have great control on your business and you won’t have to worry too much about the monthly payments as you will have everything planned out before you even apply for the business loans.

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