Presently, the market of business loans is so extensive that it can take care of the needs of virtually every business (big and small) and every entrepreneur (established and aspiring). Every business needs funds... In an age, when people have to take loans even for regular personal needs, self-financing a business is neither possible nor a viable move. Based on requirement, businesspersons can choose from secured and unsecured business loans.
Secured business loans: These loans can be availed by pledging collateral (like home) to protect the lenders investment. In return, loan seekers can negotiate for low APR and suitable repayment terms and conditions. This bargaining possibility makes them suitable for large monetary requirements (?50000 to ?1000000 approx). Please note that repeated defaults and non-repayment can lead to security seizure. Hence, borrowers should avoid over borrowing and keep track of their repayment schedules.
Unsecured business loans: These loans can be availed without pledging collateral for the loan amount. In the absence of collateral security, these loans come with high APR and virtually fixed repayment terms and conditions. Absence of collateral makes them comparatively safe and poses no immediate risks to the borrower's valuables. But, non-repayment or repayment slackness can force the lender to take a legal action.
The overall loan approval time of secured business loans is more as compared to unsecured business loans because secured deals have an additional thing - property evaluation procedure, which requires a lot of time. Hence, secured loans are mainly availed for new set-ups and major expansions, whereas unsecured loans are procured for short-term or urgent business requirements.
Assume that a businessperson is neither in a position to offer collateral nor in position to show a positive credit record... With bad credit record and no collateral, can he get a business loan? Yes, he may, as many lenders have opened arms for bad credit holders too and are offering them a second chance under the 'bad credit business loans' banner.
The above-mentioned broad categories of business loans are further segregated on need basis like small business loans or micro business loans, commercial real estate loans, franchise start-up loan, business acquisitions loans, equipment financing loans, construction financing loans, equipment leasing loans, etc. So, choose wisely and shop around.
