Can A Business Be Financed With An Unsecured Loan?

James S., from Las Vegas, N.V. asks, “I am very interested in starting a business, but just don’t want to put any of my property up for collateral due to some legal issues I have with my X-wife. I have a fairly good credit rating. Is there any way I could get an unsecured loan for my business start-up?”

Many people thinking about going into business often think only of a bank for a business loan, and do not even consider all of the other options such as an unsecured loan. But all loan options should be considered when you are deciding how to finance your business, and an unsecured loan is an option.

Advantages of an unsecured loan:

  • Less documentation required – therefore, less work for you or your CPA or attorney.
  • Your property is not used for security.
  • Loan approval is usually quick.
  • Closing the loan is hassle free.

Disadvantages of an unsecured loan:

  • Since the risk is higher to the lender there will be a higher interest rate to pay.
  • If you need a large loan for your business, you may not be able to find a lender provide a large amount unsecured. (The definition of large varies by lender, but generally a loan over $100,000 to $200,000 is large.)
  • The repayment term will be considerably less than a secured loan. If you have projected enough cash flow to handle the larger payments, this may not be a problem.

Your ability to get an unsecured loan will depend on some or all of the following:

  • You will be required to have a fairly good credit score. The minimum score will vary by lender, but a minimum will usually be in the 700 range, plus or minus about 50 points.
  • Generally you will still have to have a good business plan which shows probable business success.
  • Your ability to get the loan will go up if you are buying a proven business or franchise. If you are starting the business from scratch, you will probably have to show substantial net worth, or some other proof of financial stability, to get the loan.

There are many sources for an unsecured loan. Your business or franchise consultant should be able to direct you to a number of sources they have been successful with in the past, or you can try to search for a loan provider on-line.

Copyright © 2006, Value Added Ventures, LLC

Business Loans – Finance Your Dreams

We all have dreams. If you have dreamed of owning a group of companies or taking your business to new heights thus becoming a successful businessperson but it is the money that’s hindering your way. You need not worry because now you have business loans that can help you finance your dreams.

Business loans are provided to those who are looking forward to start up a new business or expand the existing one. These loans provide the entrepreneurs with enough financial assistance.

There are several types of business loans available in the market. Start up business loans help to start a new business. These are given to those who have a strong desire of starting up a business but are unable to do so because of some financial crisis. If you want to start with a small business and require relatively less amount, then a small business loan is the best option for you. With large business loans you can make large capital investments, start a new business and even expand the existing one.

One can avail a business loans in either of the two forms -secured or unsecured. Secured business loans can be availed only if you have something like a property or home to place as collateral. They are given at a low interest rate provided you have a good credit score and the collateral holds a higher value.

If you do not want to put a property as collateral for the fear of getting it repossessed by the lender, you can opt for unsecured business loans. These are generally given at a higher rate of interest. It takes into consideration your present business volume and credit score.

Sanction of a business loan depends on factors such as the business plan, loan purpose, credit score and the collateral placed. The loan amount can be drawn according to one’s requirements and financial condition. Normally, with a business loan you can extract money ranging from £5,000 to £100,000. The repayment period is between 3-25 years. Keeping all these things in mind the lender decides the loan amount, interest rate and monthly installments of the borrower.

Benefits of business loans are:

  • Fastest way of raising money for business.
  • Flexible repayment options.
  • Ownership of your company is retained.
  • Tax-free interest rate.
  • An effective tool for debt consolidation.
  • Can be used for expanding or renovating premises.

    The loan procedure involves lot of paper work, which is quite chaotic. An alternative to this is the provision of various online loan-providing organizations existing on different websites that keep you away from all hassles. Just a little effort is required to fill in the loan application form. You need to give all the relevant details required and the lender will serve you service with the best possible deal.

    Hence, now put all your worries under the pillow and make a fresh opening of your business plans. If you make a judicious use of the loan, you can go a long way expanding your business thus making your dreams come true.

  • Real Estate – A Very Complex Business and Surely Not As Easy As It Seems

    The term real estate includes land and buildings. It is the same as realty or “real” properly. People often tend to look at investment in realty business as very simple. After all, it just means buying property, making some additions to that before selling the same to make profit in the process. Otherwise, one may just rent it out and derive regular income. However, in fact this is a very complex business and surely not as easy as it seems. Should you be considering an investment in realty, here are a few questions you should answer before plunging into this business:

    Extra Cash

    Do not get carried away by the talks of the experts. You will need a good amount of money for investing in realty business. Well, you can get your property totally financed by financiers but this kind of financing often works out exorbitantly expensive and carries a huge amount as service charges along with finishing costs.

    Even if you can manage ten to twenty percent as down payment, you get better returns and you can see your overall debt reduced.

    Locked Funds

    Remember, real estate will not offer immediate gains. Your money would stay locked in for a considerable period, and you will not find it easy to withdraw the same in case of any financial emergency. It will be sensible on your part to keep funds for any eventuality in the family and invest the rest.

    Patience

    You will need to wait for some time before your investment in property starts appreciating. You can expect an average appreciation of eight to ten percent for homes, but there is no guarantee for that. Overall, real estate is generally reliable, safe investment but it takes time to appreciate. If you are thinking of making a quick buck, you should look for other avenues.

    Time

    Investment in realty is very time-consuming, compared to investing in mutual funds. Investment in real estate demands you to search for properties, inspect them, and oversee sales. If your idea of investment is just to make transactions using your phone and laptop, investing in property is not your best option.

    Vigor

    Energy and vigor are extremely important elements in dealing with real estate. Ever so, many factors like dealing with property maintenance with tenants or spending time, energy and money on improving a property for a profitable re-sale involve spending energy. If you are considering involving yourself in real estate, make sure that you have the time and energy for the job.

    How does real estate business appeal to you?

    Different people respond diversely to real estate business. You must retrospect if the realty business interests you, and you must search within yourself on how you perceive real estate, whether the vicissitudes interest you or whether the subject bores you. Do not venture into the property business if it fails to motivate you.