Entrepreneurs who need to access immediate funds to implement their business model usually encounter the common issue of lack of information. It’s natural for new entrepreneurs to be confused as to whether they’re eligible for a loan, and how smoothly the overall process will go.
This may be a bigger issue with younger individuals, seeing as many of them may have credit scores just above fair, which they may think disqualifies them for a business loan. This is only partly true. While it would be exceedingly difficult to get loan approval from a bank, many online lenders offer almost immediate unsecured loans, and their criteria for approval are not nearly as strict as that of banks.
If you’re planning to start a business and need quick funds to get you started, here’s what you need to know about getting an unsecured loan online.
Understand what an unsecured loan is
The most common fear of failing to pay your loan back is losing your most valuable assets. To apply for a traditional secured loan, you must offer something as collateral in the event you default on your payment. This could be a house, a car, or any other valued possession that would compensate your bank for your hypothetical default.
Unsecured loans, on the other hand, do not require any collateral in order to qualify for your requested sum. This not only makes it easier to get approval, but it also means you don’t have to risk putting your valuable possessions on the line if you fail to pay the sum on time.
But the advantages of unsecured loans don’t just boil down to what you don’t lose. There’s plenty you gain as well. Other business loans may offer more attractive payment plans and lower interest rates, but will not allow you to own any equipment purchased until you pay back your fees in full. This is not the case with unsecured loans, which grant you full ownership of anything you purchase with the money lent regardless of when you’re scheduled to pay your lender back.
It’s also very flexible when it comes to repayments, with a myriad of plans to choose from. For instance, many lenders will offer you to repay your loans faster by paying extra fees between due dates without penalties.
Browse your options thoroughly
If you’re set to land yourself an unsecured loan deal, then you better invest some time in finding the right lender for you. Some lenders will offer you the same amount of money with higher interest rates than others. The easiest and quickest way to browse your options is to consult an Ebroker or an online loan broker to do the work for you. Loan brokers provide you with a list of your options, and will often explain to you the pros and cons of each.
What makes these websites efficient is how they gather up to a hundred specialist business lenders in a single platform for you to choose from. You get to compare the key differences between those businesses without having to manually search the net to make these comparisons.
On top of unsecured business lenders, some of these institutions offer equipment finance, invoice discounts as well as trade finance, which can all be found on broker websites. If you’re unsure how to use such a platform, it’s as easy as using a search engine, but with filters that allow you to find the most affordable lender in your area or one that can offer you the highest loans with the least interest rate.
Make sure that the investment website, has direct connections with lenders. That way, you can ensure a quick delivery as soon as you make your pick.
Make direct inquiries as soon as you’re connected to a lender
Connecting to a lender online takes a few minutes, but paying back your loan doesn’t. If you’re planning on using your funds for a promising business, you want to make sure that your repayment plan is realistic, so you don’t have to risk paying higher interest rates in case you default on any of your payments.
The safest way to do this is to ask your lender as many questions as you want. If you’re in a hurry for the loan, you don’t need to worry because unsecured loans can be delivered on the same day or in a couple of days. Loans can reach up to $150,000, and repayment plans vary depending on the lender.
Have your bank statements ready
Unsecured loans don’t require an incredibly impressive credit score, but your lender will still want to make sure that you won’t default on payments. Having the needed documents ready will definitely speed up the process of the application process.
Most lenders will also assess your business model before lending you the sum, in order to analyze potential profit and a suitable repayment plan based on the average of your predicted profit.
The downside is, the due dates of your payment will be tight and very expensive, but the upside is that you’ll only be in debt for three to six months, which is a negligible period compared to starting a permanent business.
Talk to your broker
Your broker isn’t just a medium through which you can find a lender. They’re experienced professionals who can make realistic predictions of how well your business can thrive in a few months’ time. You can request from your broker to make inquiries on your behalf.
Brokers will want to make sure that you’re able to pay your debts on time because you’re practically a recommended customer and they’re keen on maintaining a good relationship with their connections, so it’s safe to say that you can trust their insight and choice of lender.
Unsecured loans can easily have your funds delivered online through an easy-to-fill application and a short assessment phone call, offering a collateral-free deal to safely fund your small business. Never make a quick decision based on the first lender you’re connected to, and don’t hesitate to make any inquiries before you sign a contract.