Guaranteed Unsecured Loans: Hassle-Free, Affordable Financing For Your Business

Obtaining financing for business, especially in a start-up stage, is a headache for many business owners. A very simple financing scheme allows acquiring guaranteed unsecured loans with competitive interest rates and high amounts.

Unsecured business loans are great for starting or expanding a business, yet are rather difficult to obtain. Banks see unsecured loans that newly formed businesses wish to take as an extremely high risk, and therefore often refuse to grant them. If they do, the loan provisions are often very unattractive as banks assign high interest rates and restrictive terms to limit their risks. However, there is an easy way around it, allowing borrowing large amounts at decent interest rates – guaranteed unsecured loans for business.

How Are Guaranteed Unsecured Loans Different

How are guaranteed unsecured personal loans different from regular unsecured loans? Unsecured loans do not have any collateral requirements, i.e. they do not require the borrower to put up any property to secure a loan. Unsecured loans are purely credit based, and banks give borrowers money just based on their past credit track and on the written promise of repayment. As unsecured loans mean less default protection for banks, they offset their risks by restricting the loan terms by enforcing shorter durations, lower amounts, and higher interest rates.

How Guaranteed Unsecured Loans Work

Guaranteed unsecured loans, while having the same features as regular unsecured loans, are considered as less risk by banks as they have an added layer of safety in form of a third-party guarantee. The way it works is that a borrower asks another party, whether it is an individual or a company, to issue a written guarantee of repayment should a primary borrower fail to honor financial obligations. Simply put, guaranteed unsecured loans are cosigned loans. As these loans pose fewer risks for lenders, they are often willing to offer competitive interest rates and grant higher loans amounts, allowing the borrower to benefit from lower monthly payments and reduced borrowing costs. Another benefit of guaranteed unsecured loans for business is that there are no collateral requirements, making them perfect for people who do not wish to risk their property, or for the ones that do not have any suitable assets to satisfy the collateral requirements set by the bank.

How To Secure Guaranteed Unsecured Loan For Your Business

The problem that many people face when applying for guaranteed unsecured loans is finding a cosigner for the loan. The easiest solution for this problem is to set a guaranteed unsecured loan for your business. In this case, a business is going to be a primary borrowers and a business owner is going to be a cosigner. It is noteworthy that such scenario is only possible when a business entity is completely separate from the business owner; therefore, sole proprietorships do not qualify. Limited liability companies and corporations are the best entity types to set up in case you intend to use guaranteed unsecured loans.

If you need a guaranteed unsecured loan for your business with tolerable interest rates that would not break your bank and decent amounts that would help to finance your business activities, you need to follow simple steps. First, you have to ensure that you have your business accounts set up completely separately from your personal accounts. Second, you have to find several lenders in order to get the loan quotes. Lender search may be easily performed online or through a loan broker who would be able to match you with few lenders. Last, you would have to select a guaranteed unsecured loan offer that best suits you business financing needs.

A Business Financing Alternative - Unsecured Lines of Credit

Sources of unsecured financing still exist for qualified business owners that previously relied on real estate equity to support their business expansions and to provide working capital. Despite recent financing cutbacks by major banks, here's is a strategy for successfully being approved for an unsecured business line of credit.

Unsecured Lines of Credit are an excellent financing alternative that business owners can utilize to replace their frozen home equity lines of credit. These lines of credit will be more advantageous than business loans because, like credit cards, interest is paid only on the outstanding balance. With two years in business and a 680 or above credit score, business owners qualify for up to $1 million with full documentation. Applications can be approved for up to $350,000 with no documentation.

Unsecured Lines of Credit can be obtained in roughly 4 to 6 weeks but should never be applied for directly by the borrowers themselves. The borrower, although qualified, cannot simply walk into a lending institution or bank for an unsecured line of credit and automatically be approved. Companies that specialize in unsecured lines of credit are available and should be contacted to assist with the substantial preparation that is necessary. It is highly recommended that the business owner seek out a professional business finance consulting firm with contacts and affiliations with several banks and financial institutions that offer these programs. The application process is somewhat complicated and documentation must be properly formatted and compiled to avoid unnecessary rejections.

Business owners can no longer rely on the equity in their real estate holdings to finance their business expansions and growth. Despite the fact that they paid high fees for the availability of home equity lines of credit, even business owners with excellent credit scores and excess equity in their properties are finding it impossible to access their credit lines. The main reason is that banks have virtually stopped providing homeowners access to the equity in their properties as lines of credit. Home Equity Lines of Credit have been frozen by most major lenders because declining property values have made these cutbacks necessary. IndyMac, Washington Mutual and other major mortgage lenders have made decisions to rescind these credit lines, according to the terms of their contracts with borrowers.

These recent eliminations of access to funds for their businesses have hit business owners especially hard. Many of them have used home equity lines for working capital during slow periods or as sources for cash during periods of expansion. The net effect is that the necessary funds for business uses were expected but are not available. The lack of time to make other arrangements because of this sudden policy change can severely impact a business owner's ability to survive a shortage of funds. There are also business owners who paid back their credit lines in the anticipation that they would be able to utilize them again. That option is no longer available, leaving them without their usual funds.

In summary, Unsecured Business Lines of Credit are methods of financing that are still available to qualified borrowers who are also business owners. Firms that specialize in acquiring unsecured lines of credit should always be involved in this application process. The applicant will need assistance in properly preparing and organizing his documentation for submission to lenders. A firm that specializes in this type of financing will be able to present the borrower as the "perfect applicant" because its business is to assure that all aspects of the application adhere to the current credit, submission and underwriting guidelines of each individual bank. This very important initial step in the process will greatly enhance the business owner's potential to be successfully approved for an unsecured line of credit.

Alternative Business Financing

Are you looking for a business financing solution for your company? Does your company have cash flow problems and needs funding? Read this article to learn if factoring financing can help your business.

Finding the right solution to finance a business has always been a challenge for owners. Most are only aware of conventional products, such as business loans or lines of credit, that are offered by financial institutions.  While this products can work very well, they are usually offered by financial institutions that have conservative lending standards which can make the inaccessible.

Not too long ago, getting a business loan was relatively easy, especially if the business owner had a home that could be used as collateral. Nowadays, business loans are much harder to get. Financial institutions will ask for two to three years worth of financial statements and review them very carefully. Likewise, they will only get involved in lending transactions if the business has substantial collateral and if the owner has a significant net worth.  These criteria all but rule out small business. Because of this, alternative business financing solutions have been on the rise.

Most small companies that look for business financing do so because they have cash flow problems. Usually these happen because the company has to give 30 to 60 day payment terms to their customers but has expenses that need to be paid quickly. In effect, they can't afford to wait up to 60 days to get paid. One obvious way to fix this problem is to use a line of credit to cover expenses while waiting to get paid. But if a line of credit is not an option, invoice factoring may be the right alternative solution.

Factoring is an form of business financing that accelerates your cash flow due from slow paying customers. It works by using a financial intermediary, called a factoring company, that advances funds  against your slow paying invoices. The factoring company holds the invoices as collateral, while your company gets a cash infusion that can be used to meet your current business expenses. The transaction is settled once your customers pay the invoices , though many companies establish revolving factoring lines that can be used on a regular basis.

Most factoring transactions are structured so that invoices are funded in two stages. The initial advance is provided  as soon as the work is completed and your customer is invoiced. Most initial advances are for 80% of the invoice, but this can vary based on certain conditions. The second advance is provided once the invoice is paid in full and covers the remaining 20%, less the factoring fee.

Factoring fees usually vary based on a few parameters such as the creditworthiness of your customers, the quality of your invoices, how long it takes for your customers to pay and the size of the factoring line.   Generally the factoring fee will be based on a percentage of the invoice.

One of the main advantages of invoice factoring is that it's easier to obtain than most conventional financing. The most important criteria to qualify is the credit strength of the companies that will pay your invoices - this represents the collateral for the factoring company. Aside from that, your invoices need to be free and clear of any legal or tax encumbrances.  Lawsuits, judgments and tax problems may hinder your company's ability to  get factoring financing. Most factoring companies will check this information during their due diligence process.

The biggest benefit from factoring is its flexibility. Most factoring lines are not based on fixed amount, but rather are tied to your sales. This means that the invoice factoring line can grow with your business, provided that your sales to are to credit worthy companies. This makes factoring an ideal solution for small and medium sized companies that have good potential that is being hindered by cash flow problems.