This can be an exciting time in your life. Not only are you making a change that will better your future, but you are going to be in charge of every aspect of your new venture.
As you begin to move through the planning process, you will find that money is at a premium. No matter how well you plan, there is a good chance that you will need additional funds. Starting a business is expensive, no matter the industry or how much knowledge you have.
Unsecured startup loans offer many benefits to the borrower.
It is important to consider this type of loan, as well as others, to ensure that the financial aspect of your business is in good shape from day one.
Here are several key features to be aware of regarding unsecured startup loans:
- You do not need collateral. Unlike a secured loan, the bank is offering you money based on your past history as well as your promise to pay it back according to the terms and conditions.
- Higher interest rate. Since the bank is taking a bigger risk, they are going to charge you a higher rate of interest on your loan. To avoid a higher rate, opt for a secured startup loan.
- Good personal credit and a clear history will make the application process much easier on you. Since you don’t have a history with your business (it is a startup, after all) the bank will look at your personal credit score and history. Make sure you have these details in order before you apply for a loan.
- Most unsecured startup loans are for no more than $50,000.
- The money is to be used for expenses related to your business. This can include anything from purchasing equipment to marketing and advertising.
Many are attracted to unsecured startup loans because no collateral is required. This allows you to get the necessary money to move forward with your business, without “putting up” an asset such as real estate.
Tip: with so many banks offering unsecured startup loans, as well as other types of lending, be sure to compare several institutions before making a final decision.
Month after month, thousands of new companies are started in the United States. With the help of an unsecured startup loan, you may be able to get your company up and running sooner rather than later.
Chris Fuller went to the University of South Florida and has worked in the financial sector for over 20 years. He has extensive experience in all aspects of personal and small business lending, from personal loans, equipment finance to cash flow based solutions for small mom and pop businesses, and large corporations.