For your business to be up and running, it needs capital to pay utilities, buy raw materials, pay for advertising and insuring costs for the business. If your business has no credit history or is an established business with bad credit then getting a business loan may prove to be a challenge. Banks require that a business have good credit history and a credit score that is above 650 points. Other lending institutions look at both personal and business credit reports to determine if to advance capital to the business.
Even if you borrow money from relative and friends, it is usually not enough to cover the costs of expanding your business, maintenance and paying wages to employees. Â Banks currently have stopped lending despite the lowering of interest rates by the government. Businesses with great credit ratings and high credit scores are finding it hard to get loans so getting business loans whilst having bad credit is almost impossible when borrowing from banks.
There are two types of business loans; secured business loans and unsecured business loans. Â Secured business loans require collateral in case of defaulting while unsecured business loans are usually offered to businesses that are not in risk of defaulting. If you have bad credit and need an unsecured business loan, you can get the loan based on expected future credit sales until the unsecured business loan is paid off. These unsecured business loans are fool proof and hassle free so you can worry about other aspects of the business that need to be taken care of.
These funds can facilitate the day to day activities of your business, maintenance and help increase the assets of the business since they are not up for collateral. Traditional forms of lending can be very intimidating for a business with no credit or one with bad credit. The lenders ask to see the financial statements of the company, a lengthy credit history but after a lot of scrutiny and time, decline to offer any business loans. Sometimes your business needs funding on an emergency basis and there is no time to print paperwork and take to the big banks therefore unsecured business loans can expedite the projects you need done in order to make sales and meet revenue expectations that you have set.
Unsecured business loans provides a range of benefits such as eliminating worry about cash flow problems in the business, promoting rapid growth of the business through the increased cash flow. The unsecured loans give your business an opportunity to build or fix its credit history and make it easier for you to obtain lines of credit through the traditional forms of financing. Â With the new found capital, your business can develop new products and services.
