Three Types of Unsecured Business Loans

moneyUnsecured business loans are attainable even though they seem too good to be true. These advances are typically used for the purchase of equipment and machinery, renovations and expansions or advertising campaigns. There are countless other business-related expenses that are funded through these unsecured financing options.

These funding choices are very appealing because it is not necessary to put up collateral. Applicants need to do little more than give their word that they will pay back the debt. These financing approaches are typically called “signature loans” since they require little more than a signature.

One of the most outstanding features of unsecured business loans is the absence of collateral. Typically, lenders require some sort of security to ensure that the debt will be repaid in a timely manner. No collateral is necessary with the unsecured financing option for your business.

These financing options are ideal for small businesses that show a lot of promise. Lenders are more than willing to provide funds to a feasible endeavor that is very likely to succeed. Both you and lender benefit when your enterprise does well.

Unsecured Lines of Credit

Some entrepreneurs opt for a line of credit instead of monies up front. The line of credit is a fantastic option for unexpected expenses that require fast cash. The money is available as you need it. This approach is ideal for businesses that need to access money in relatively little time.

The line of credit also benefits business owners that want to borrow as much money as is necessary. They can simply use as much of the loan as they absolutely need. There is quick cash available that can be accessed whenever additional financing is required.

A glaring benefit of the line of credit is in the interest. Borrowers only pay interest on the actual amount that they borrow. The less money accessed the less interest on the loan. This take-only-what-you-need approach is a great way to keep finances under control.

Revenue Based Business Loan

This business loan is a type of funding that has a set maturity date and fixed payment amounts. If you prefer the certainty of this option then this choice might be right for your business. Revenue based business loans are no different, but they do have some business-friendly features that set them apart from traditional bank loans. Businesses that have been in operation for more than one year have a better chance of getting unsecured financing for their needs. The lender can use the company’s past productivity into consideration in the approval process.

Merchant Cash Advance

This is also a cash flow loan, which the bank lends funds, generally for working capital, using the expected cash flow that a borrowing company generates for the loan. The money is wired directly into your business checking account in as little as 3 business days.  Then a small percentage of your VISA/MC charges go to pay down the balance or a fixed payment with a fixed term is used to pay down the loan. This is not a collateral based loan and is not driven by your credit score.  The only thing you need to qualify is to be in business 3+ months.

Financing your enterprise can be a daunting task.  Fortunately, there are different types of unsecured business loans that can help you get the funds that you need.

 

Charles Colbert is The Director of Sales with American Capital Group. Leveraging his experience & education, Charles currently partners with growth stage companies who are in need of creative financing solutions to help them grow.  He can be reached by telephone at 212-201-0729 or by email: [email protected]. Website: http://american-capitalgroup.com

 

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