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Unsecured Business Loans Fresno CA
If you have been considering starting up your own business, you’re going to have a lot of company. According to the Kauffman Foundation, during 2010, there were nearly 600,000 new businesses starting up every month proving that entrepreneurship is still very popular considering how rewarding owning your own business can be if you are successful. While the rewards of entrepreneurship are independence and wealth, the road to success is not guaranteed and the journey does not come without a certain degree of fear and uncertainty.
One of the most common fears is the accumulation of debt and the uncertainty of being able to pay it off. Remember, banks are going to factor in your credit score, your history as a professional businessperson, your reputation, and the strength of your business team. Plus, they must have no doubts about the feasibility of your business plan as well as you being able to execute it properly. Overall, there is a great deal to worry about, especially when it comes to financing your business start-up.
Secured Business Loans
In a secured business loan, the borrower leverages uses their assets (e.g. property, vehicles, etc.) as collateral to secure the debt owed to the lender. The premise of this type of loan is simple – should the borrower default, the lender seizes their assets and sells them in order to recoup the costs of the loan. Lenders typically favor secured business loans because the exit strategy is relatively safe and they offer lower interest rates while basing their decision on the appraisal of those assets.
Unsecured Business Loans
Also known as personal or signature loans, these loans are typically issued and supported based on the borrower’s creditworthiness rather than the collateral provided. In other words, you are not leveraging your assets against the debt. This is the primary advantage of unsecured business loans. However, approval is difficult without a high credit rating since the exit strategy is eliminated for the lender. So these loans come with a higher interest rate to compensate for that lack of security.
Another advantage is that unsecured business loans enable borrowers to build relationships with lenders and demonstrate how creditworthy they are. Regardless, there is always a certain amount of risk involved for the borrower and lender with either type of loan. Consequently, the risk of getting accepted is as great as the risk of denial. The primary factors that lenders look at include:
- a business team that inspires confidence
- a solid business plan
- an achievable and feasible repayment scenario
On a closing note, be sure that you thoroughly research all of the options that are available in order to make the most well-informed decision. Biz4Loans help relieve the stress of deciding on the type of business loan to pursue. With access to a network of over 750 banks and lenders, we can provide the fastest loan processing in the industry.