subject: What An Unsecured Business Loan Is [print this page] When you need funding for any part of your business, taking out a loan is one of the best options. You borrow a set amount of money now and pay it back with regular monthly payments as your investment works for you to help your business be more profitable. While many lenders require you to set out a detailed business plan for how you"ll use the money or put up personal or business property as security in case you don"t repay the loan, unsecured business loans don"t require either of these.
The concept of security for a loan is based on the idea that the lender wants some sort of assurance that the money will be repaid. This assurance is often in the form of a business plan that looks like it will succeed, a piece of property that the lender can seize if the loan isn"t repaid, or a credit score that shows the business has repaid its debt in the past. The lender issues the loan on the basis of one or more of these types of security.
With unsecured business loans, you don"t need to put down security or provide a plan for how you"ll use the money. Instead, the lender typically charges a higher interest rate to help cover its potential for loss. Because it"s a specialized loan product, most major lenders don"t offer unsecured business loans. Instead, you"ll have to turn to alternative lenders, like UnsecuredBizLoan, to have the chance to apply for a loan.
Other than the process of getting the unsecured business loan, all the rest is just like any ordinary loan. You receive the money from the lender and can use it in whatever way you need for your business. Then you just have to make payments on your loan according to the schedule on your agreement until it is repaid in full. If your business has the money, you can even repay it early!
The U.S. Small Business Administration sponsors several different programs to help promote the growth of small businesses. Today, we will discuss some of the things the SBA does to promote growth in small businesses:
Equity Financing
The SBA offers venture capital to small businesses through its Small Business Investment Company Program. SBICs are managed investment funds that the SBA regulates. SBICs provide financing to small businesses in the form of equity or debt. SBICs operate similarly to private and venture capital funds. However, unlike these other funds, SBICs only invest in qualified small businesses.
Surety Bonds
The SBA"s Surety Bond Guarantee Program provides assistance to small contracting businesses that can"t obtain surety bonds on their own. Surety bonds are agreements made between a project owner, a contractor, and a surety. The agreement requires the contractor to meet the conditions of a contract. If he or she does not meet the contract"s conditions, the surety will take responsibility for the contractor"s job and ensure that the tasks detailed in the contract are completed.
Under the SBG Program, the SBA enters into an arrangement with a surety in which the SBA promises to pay a percentage of the cost if the contractor fails to meet the terms of the contract. This guarantee encourages sureties to work with small business contractors. The SBG program will guarantee surety bonds for contracts as high as $5 million.
Debt Financing
The SBA is not a lender. However, it publishes guidelines for loans that its partners make. The SBA also guarantees that its partner lenders will receive repayment for their loans, which reduces the lenders" risk. When small businesses apply for loans from the SBA, they are actually applying for loans offered by SBA partners that carry guarantees from the SBA. SBA-guaranteed loans are not always available to borrowers who have access to other reasonable financing.
To apply for funding for your small business, use the form on the right to begin the application process.
For more information, go to Business Loans at http://www.unsecuredbizloan.com/business-loans
