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.