Getting a loan with no collateral
If you’re starting a business, or if you have been running one for some time, you probably realize that it’s vital to obtain funding in order to for your business to get off the ground and thrive. While there are many sources of funding you can consider, not all are right for you. When you think about obtaining a loan, you may first consider a traditional loan from bank. These are typically secured loans, or ones in which you must put up collateral against the loan. While secured loans have their place, there is risk involved, namely the potential of losing assets if the loan defaults. An unsecured business loan, on the other hand, doesn’t require collateral. There are a few types of these loans you should seriously think about for your business.
With a personal guarantee, you are saying to a lender that you guarantee you will be able to pay back the money you borrow, regardless of how well the business is doing financially. You are personally responsible for repaying the loan. The challenge with this type of funding is that you are completely liable for the repayment, so there is some risk involved. However, if you are a wise planner and only borrow what you can afford, this can be a good option.
You probably have a credit card for your personal needs, and you can do the same if you want an unsecured business loan. You don’t need to put up any collateral to obtain a credit card. Instead you are essential promising a creditor that over time you will repay the loan. Though credit card rates can be high, if you are disciplined, this can be a viable option if you need some immediate financial help for things such as office equipment and supplies.
Small Business Loans
While many financial institutions will grant you a secured small business loan, you can find these in the form of an unsecured business loan. If you have a solid business plan and a track record of success and financial stability, you can find lenders willing to help.
Growing in popularity, this type of funding allows you to visit sites where you can find individuals rather than corporations or entities willing to lend you the money you need. Payment are made in installments, and rates may be on the high side.
If you are partial to an unsecured business loan, you have options. Consider these choices for your business.