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Unsecured Loans Bad Credit: Get financial support without pledging any security
Availing a loan for the good credit holders is not a big deal. But, the problem arises when one is having a bad credit score like bankruptcy, defaults, CCJs, IVA, late payments, missed payments; insolvency, arrears, foreclosures, etc. And, the condition worsens if one is looking for an unsecured loan and that too with a bad credit record because in such a case most of the lenders deny granting loans to such borrowers as they fear if they would repay the entire loan amount by the time. Thus, to help out such people, unsecured loans bad credit have been introduced in the financial market which helps people to borrow money with their bad credit and without pledging any security against the loan. These loans are the suitable option for the non-homeowners and tenants.
Unsecured loans bad credit as the name specifies are the loans in which the borrower is not required to pledge any of his valuable assets like any building, any property or any real estate as security against the loan. Thus, the borrowers need not worry about the re-possession of their valuable assets. But, the lender in this case is at great risk if the borrower fails to repay the entire loan amount by the fixed time duration. Thus, he imposes slightly higher rate of interest on the loan to recover his risk to some extent. These loans are the best suitable option for the borrowers who either dont wish to pledge any of their valuable assets as security against the loan or who cannot actually afford collateral. The loan amount for such loans ranges from $500 to $25000 with flexible repayment and affordable installments. But before applying for these loans, borrower must satisfy some conditions he must be above 18 years of age, he must have a job and must be a citizen of UK. Even the borrowers with bad credit history like CCJs, bankruptcy, arrears, defaults, late payments etc. can also avail such loans without any kind of trouble or hesitation. By repaying the loan by the time, the bad credit holders get a chance to improve their credit rating as an advantage. Borrower can use the loan amount absolutely according to his needs without any kind of limitation or interference. It may be for purposes like renovation of the home, debt consolidation, examination fees, for operation, grocery bills, traveling, wedding, etc.
The online application method is easy and fast to avail these loans. After filling a simple application form with the required personal details, the lender verify it and submit the required amount directly in the borrowers checking account. You will get your money deposited into your bank account on the same day or the next business day. Good online searching can get you best loan deal ever and that too from the very comfort of your own home.
How to Borrow Money, Part 2
Debt Financing
Debt financing means borrowing money that must be paid back over a period of time, usually with interest. It can be a short-term: less than a year and a long-term more that a year. You do not relinquish any ownership rights by taking a loan and limited by obligation of paying a loan back with interest. This is why loan for new businesses usually secured by one or more of the following: owners personal guarantee, real estate, company assets, etc.
The disadvantage comparing to the equity financing is that you must make scheduled payments regardless of your companys financial situation.
Debt sources can be divided into two groups: non-professional such us relatives, friends, and employees, etc. and professional such as banks, credit unions, etc.
Financial Institutions, by themselves, traditionally provide short term financing for small and mid size businesses: line of credit, equipment loan, etc. Long term loans in many cases guaranteed by the Small Business Administration loan program that helps leverage out risk for financial institutions.
There are some pros and cons in both Equity and Debt Financing. The best capital structure will depend on many different factors. For more sophisticated cases I suggest to hire a seasoned Financial Consultant.
Points the borrower usually evaluates before you giving the money:
1. How good is your credit history
2. Do you a solid collateral
3. Will you be able to repay the loan
4. Does your management team have enough management experience
Your personal financial situation while starting a business
It is always a good idea to build your personal credit history. In the beginning your business does not have any credit history and lender will use your personal data to evaluate a loan terms. Order you personal report to see where you stand and check it for any unexpected errors.
Work with your personal budget. You need to understand that usually you will not be able to take any cash from new business for a while. Make sure that you have enough money to start you business venture and enough money to pay you bills until business will become cash producing.
Put together projections and classify your future business expenses. Some of the expenses will be one-time costs such as the fee for incorporating your business; some will be ongoing such as inventory, insurance, etc.
There are two types of expenses: variable such as inventory, sales commission, etc. and fixed such as rent, utilities, etc. If you feel that you do not have enough expertise to do budgeting and forecasting it might be a good idea to hire a professional to do that.
Yury Iofe, MBA
Universal Business Structured Solution
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