subject: Unsecured Business Loans - Consider Them When You Do Not Want To Risk Collateral [print this page] Are you thinking of expanding your business and need funds to do that? Well, there are two options that you may consider. Secured and Unsecured business loans. As the name suggests, unsecured business loans are those in which the borrower does not need to pledge any collateral to get his loan sanctioned. The rate of interest charged by these loans is comparatively higher as compared to secured loans as the entire risk is covered by the lender. Since the borrower does not pledge any property or asset against the loan amount, he need not worry about losing his property in case he fails to make the repayment in time. This makes the business loans a favorite among the business owners.
business start up loans are of short term and can be used for meeting sudden business needs. The amount that you gain can be used for meeting business purposes only and this makes these loans different from personal loans. In order to secure these loans, you must have a good credit history. However there are many other parameters to find out the ideal borrowers. Since these loans are unsecured in nature, the lenders need to be extra cautious about whom they want to provide the credit.
Since they are short term in nature, the borrower needs to pay a high rate of interest. But these loans come with a benefit attached to them. The interest on these loans is calculated on the used portion of the amount provided rather than the whole amount. This is an important factor as the cost of the loan gets much reduced due to this function. It is a favorable loan for business men because there is no link between the business credit history and the personal credit history. One does not need to provide his identity number in order to avail these loans.
Before you actually get the desired amount, you need to fill in a simple form that takes into account the legal and business obligations that need to be fulfilled prior to approval of the loan. The amount that you gain may be utilized for expanding the existing business or starting a new one. These loans can also be used as working capital. There are several positive factors attached with these loans but you should also take into account the negative points in order to judge whether it is the right option for you.
