Unsecured Small Business Loan

Unsecured Small Business Loans

Unsecured small business loans are the ultimate solution to the perpetual problem of lack of funds for small business and entrepreneurs. While secured loans have played their rounds, unsecured loan is becoming the preferred choice for more and more small business. An unsecured small business loan comes with a host of advantages, the main one being they do not require any type of collateral. Though unsecured loans would attract a higher rate of interest the flexibility with the terms and conditions and ease of availability makes them the first option for all small business.

As the small business owners have often seen people falling in trap with secured loans they are more inclined to go for unsecured small business loans offered by lending companies at flexible terms and easy interest rates to satisfy their need for finance. Unsecured business loans are gaining from the general aversion towards secured loans that has been growing in businessmen and common people over the years.

Though unsecured small business loans would come with a higher rate of interest, it is pretty reasonable and logical. The lenders put their money at stake by offering loans without security, so they need to charge this higher interest rate to set off the higher degree of risk involved in the whole process. However, in most cases the lender would like to confirm about the credit history of the borrower before offering an unsecured small business loan.

Other than the approval of loans sans collaterals, unsecured loans are similar to other loans in most other aspects. The process is initiated by the borrower filling up the unsecured loan application, which can be done online, or by visiting the broker in person. Some companies also offer the facility for telephonic application though that is not much popular. Once the application is received the lender starts to work to find more about the borrower in regards to his credit history and their financial details also decides on what they can offer to the borrower. If the borrowers requirement and the lenders offerings are inline the deal works out.

Generally Unsecured small business loans are approved faster compared to secured loans and this is one of the key factors that the borrowers would consider when they have multiple lenders offering them an unsecured loan. Borrowers like to have their unsecured loans available promptly.

Unsecured small business loans are now in the mainstream and are considered as a regular source of acquiring finance. Unsecured loans are offered with absolutely no strings attached and the borrower is free to spend it any way they find suitable. This makes it a more lucrative proposition for the borrowers and they are increasingly using unsecured small business loans for business start up, debt settlement, purchase of assets and many other usage that were previously supported by the secured loans.

However, as the scenarios change new and new sources of finance would come up and even unsecured small business loan is not the only option for small businesses any more. Business cash advance has come up big way and is definitely a better finance option for small business. The only condition is that the business needs to have $1500 worth of monthly sales in Visa or Master card to avail business cash advance.

1rstfunds.com does not provide any business loans. What we do provide is business cash advance. Cash advance is not a loan and the person taking the advance is not personally liable for repaying it.

Differences Between Unsecured Small Business Loans and Business Cash Advance

A typical business loan would require a written loan proposal and is time consuming and very restrictive. You will have to follow a strict monthly schedule of repayment irrespective of your monthly business revenue flow. Also for loans, it is very difficult to get when you need it the most, rather when you are in an affluent state the banks are more likely to offer a loan. Bankers focus on past credit history to determine the loan repayment program and assurance of the set monthly repayment is their prime concern while approving a loan.

A cash advance is a fund given against the monthly credit card sales volume to facilitate the instant availability of cash requirement of the organization. To get a cash advance from 1rstfunds you need to fulfill 3 conditions:

  1. Your monthly Visa/Master Card business must not be less than $1500
  2. You must be in business for at least 2 years
  3. Credit card statement and bank statement for last 3 months for seasonal business and 12 months statement for non-seasonal business must be available.

Cash Advances are repaid from the future earnings, to be more specific; it is repaid from the future sales transactions processed through Visa and Master Card. A monthly percentage of these future sales is used as the determining factor for repayment. There is no repayment schedule, repayment occurs automatically and follows your business revenue flow.

The business is free to use the fund received in cash advance for whatever purpose they see fit, however, in case of a loan, the lender often dictates the purpose for which the company can use the fund. So, a business cash advance is no way similar to a unsecured small business loan.

Business Cash Advance

Business Cash Advance – Small Business Cash Advance by First Funds

Business cash advance is one of the most easiest and popular methods for small business financing. Cash advance business has been around for a while but gained the popularity and exposure in the last few years. There are merchants who purchase a predetermined number of VISA or Master Card sales receipt and provide business cash advance to the sellers in lieu of those receipts.

Any fund received through a business cash advance is not a loan, it is a cash advance paid against Visa or Master card merchant account receipt and these amounts are paid back through the merchant account itself.

Prerequisites for a Small Business Cash Advance

  • The business must accept Visa or Master Card as a mode of payment
  • The business must process a payment of $1500 or more in a month
  • The business should have been there for at least 2 years.
  • Credit card statement and bank statements for 3 month for seasonal business and 12 months statement for non-seasonal business should be available.

The biggest advantage that the cash advance business offers to the businessmen is that they are not personally liable to repay a small business cash advance. Most retail store front and small business accepts credit cards as a form of payment. Rather than using the personal credit or personal collateral, personal guarantor etc to get a small business cash advance the owner can sell his future credit card receivables at a discounted price to the cash advance business companies. This is pretty much similar to factoring, except in this case your credit card receivables are factored rather than the business-to-business invoices.

Cash advance businesses get repaid through future Visa and Master Card sale. Other payments received through cash check or other cards are left with you and only the Visa and Master card payments are used for repayment. There are no fixed payment schedules for business cash advance and they get repaid automatically when the merchant has a Visa or Master Card Sale.

Unlike venture capitalist systems, cash advance business would not take equity ownership of the company and the company is free to use the business cash advance for any usage that they see fit.

Small Business Loans

Business Loans

Business loans have been the conventional method of funding businesses for quite some time now. Whether it’s a small, medium or big business or you want to start your new business, business loans can work as an effective solution to provide finance for your business or as a source of capital to start your new business. Not only that, business loans can also be useful if you are planning an expansion of your existing business or increasing your efficiency by acquisition of better technology.

Business loans, though useful for all businesses, small entrepreneurs are particularly benefited by small business loans.

Small Business Loans

Small Business Loans are often the first choice for small entrepreneurs as a source of finance for starting their business. Learn more about Small business loans and other options available.

Small business loans are loans that are given to relatively small business houses with few assets and generating a moderate amount of revenue and profit every year. Whether a business would qualify as a small business and get asmall business loan depends entirely on the lender, however, there are few factors that any lender would consider before offering a small business loan to an entrepreneur. These factors would generally include value and type of asset owned, revenue and income generated annually, number of years the business is in operation, number of employees etc.

Small business loans can sometimes be very difficult to get, as there are often strict restrictions in regards to size of the business and other criteria. Also, generally all small business loans require a personal guarantee from the business owner and also the small business loan amount to be secured by the assets of the business.

A small business owner needs to ensure that his business generates enough revenue to instill confidence to the lender that the business is capable of repaying the principle and the interest amount for the small business loan. Some of the most common sources for small business loans are commercial banks, private finance companies and the SBA (Small Business Administration).

Other than the requirement for a personal guarantee to obtain a small business loan there are few other disadvantages. One of the main disadvantages of taking a small business loan is that it can affect the personal credit rating of the business owner and negatively affect his position with the bank.

Also, as these small business loans need to be secured by personal guarantee and business assets need to be provided as collateral, it might result in lose of assets in case of a default. In almost all cases the lender reserves the exclusive right to decide what constitutes the default and the small business entrepreneur needs to abide by those term.