Running your own business is tough, but a brave step. And unless you grow your company into a corporation, you may still have to ask investors for additional capital. Small business owners with poor credit or who lack a credit history usually have difficulties getting financing through traditional means, such as a loan, line of credit, or credit card, as they do not have enough collateral to secure it. Thus, the best option is an unsecured small business loan, as well as a merchant cash advance, as it does not require any collateral either. It is fortunate that there are lending alternatives that can help small companies get the financing they need to achieve their intentions such as a renovation, building inventory, or capital improvements.
What is an unsecured business loan?
An unsecured business loan is a credit that is issued and supported only by the company’s creditworthiness and its owner’s general reputation, and not collateral. Your creditworthiness is based on factors such as your history of repayments and your credit score, which measure the borrower’s ability to pay this debt back.
It is riskier for a lender than for a borrower. That is why it has a higher interest rate than a secured loan. It is important to notice that banks rarely provide this type of borrowing for business needs. They would rather provide personal credit that is not secured by their houses and cars, especially when an individual borrows to buy a car or a house. Thus a bank has a right to take this car or house away in case of failure to repay.
The unsecured business loan is a fixed-rate product offered on the basis that does not require any collateral. Monthly repayments, as well as the interest rate, are fixed for the life of the loan, which allows you to plan your day-to-day cash flow. You can borrow from $1,000 up to $250,000 for your business for any period of 12 months and five years.
Any business can apply for an Unsecured Business Loan since 800fund.com invests money in the American economy to help local companies where traditional financing institutions do not give them a chance to grow. For instance, its merchant cash advance provides business owners with up to $250,000 cash without collateral. It features an excellent repayment method that takes a small, fixed percentage of the borrower’s daily credit card sales transactions. It is very easy to qualify for this type of credit. The simple requirements are at least one year in business and monthly credit card transactions averaging at least $3,000. With no fixed payments, hidden fees, or upfront costs, a merchant cash advance could be the ideal solution for a merchant who seeks an unsecured business loan.
What happens if you fail to repay an unsecured loan?
If you fail to make payments on an unsecured debt, the creditor can contact you to try to obtain payment, report the delinquent debt to a credit reporting agency, or file a lawsuit against you. A nongovernmental, unsecured creditor cannot seize any of your assets without a court judgment.
Unsecured loans allow you to borrow money for your company’s needs without giving security on any assets, like your home, for example. They are a quick and easy way to get an affordable cash injection into your business. A personal guarantee will be required, which means that you’ll be required to pay back the borrowed money if the company is unable to. We do this to protect the investors who lend to you.