123ArticleOnline Logo
Welcome to 123ArticleOnline.com!

ALL >> Business >> View Article

Small Unsecured Business Loans: What You Need To Know

By Author: Andrew Edmonds
Total Articles: 49

Small businesses also have access to Unsecured loans for people with bad credit and can use it for a startup, capital investment or increasing the asset base, purchase of raw material or to meet operational costs.It is perhaps the most viable type of loan for new ventures which have yet to establish an asset base or have a suitable credit history. It also keeps the personal assets of the borrower protected since secured loans may require personal guarantees from him or expect to use his house or other assets as collateral. An unsecured loan is similar to a credit card which can be used to make purchases for business needs. Small unsecured business loans are offered by banks and financial institutions provided the small business is able to meet their tough criteria for selection and approval. Some of the features they would like to see before sanctioning an unsecured loan include:

1. A sound business plan that details the production process, the manpower hired and the time frame before it will yield profits. It is important that the entrepreneur makes a special effort to prepare the business plan.
2. Own funds of the entrepreneur if invested in the small business, give a positive signal to the bank that it is a serious venture and that he is committed to making it work.
3. A good business credit score, if established, makes the bank view the entrepreneur who will pay back the loan
4. His own personal credit history gives insights into his past credit dealings and if he is capable of defaulting.
5. The profit potential of the business also works in the borrower's favor.

Some facts about small unsecured business loans

1. Small unsecured business loans are available to anyone and everyone, both owners and non owners, and even people with bad credit history
2.They are offered both for short term and long term.
3. Unsecured loans offer lesser risk but equal responsibility towards repayment and interest
4. The interest rate charged is higher because the lender bears greater risk without asking for collateral
5. Interest rates charged could be fixed or variable. Most borrowers prefer fixed interest rates to avoid the risk of paying higher interest should the rates increase.
6. Unsecured loans are smaller in amount which is generally a percentage of the borrower's earnings.
7. Unsecured loans are easier to approve and quicker to get.
8. They are the best way to raise money to meet emergencies.
9. Unsecured loans are also known as signature loans since they are sanctioned without any additional documentary proof.
10. Unlike other loans, prepayment of an unsecured loan invites a penalty and may turn out to be even more expensive

Unsecured loans are ideally suited for small businesses since they are easier to process, quicker to receive even though they prove to be more expensive. But they have to be paid back by the borrower, to maintain a clean credit record.

More About the Author

i am Andrew Edmonds From UK and i am working for Eaffy Solutions Ltd. and i like to submit articles and blogs..

Total Views: 59Word Count: 477See All articles From Author

Business Articles

1. Tips On Finding The Right Garage Door
Author: Tony Randall

2. Is Your Loading Bay Design Ready For Unmatched Productivity?
Author: Asmita Lokhande

3. Things To Remember For You To Compare Cars
Author: Rahul Sharma

4. Bulk Sms Service Provider
Author: Ranjan

5. Assetz 63 Degree East
Author: DEEPTHI

6. Orchid Whitefield
Author: DEEPTHI

7. Product Information Management System Builds Income At Lower Costs
Author: skumagic

8. Net Promoter Score Is A Core Metric For Cem
Author: Andy Watson

9. Importance Of Feedback Loop For Generating Happy Customers
Author: Andy Watson

10. Customer Surveys Is A Technique To Calculate A Customer’s Feedback
Author: Andy Watson

11. How Can Customer Satisfaction Survey Benefit The Business?
Author: Andy Watson

12. Nps Score Is A Kpi For The Customer Loyalty
Author: Andy Watson

13. Few Reasons Why Iso 9001 Training Course Is Beneficial For Every Organization
Author: mavi certification

14. Auto Transformer - Advantages And Applications
Author: Trutech Products

15. Mahindra First Choice- The No.1 Pre-owned Car Company
Author: Rahul Sharma


Login To Account
Login Email:
Password:
Forgot Password?
New User?
Sign Up Newsletter
Email Address: