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What Are Some Advantages of Unsecured Business Loans?
If you’ve been in the process of starting up your own business, or are helping someone do so, then you must know that the biggest factor that determines whether or not that business succeeds is not its marketing. Nor is it the sales people. And it certainly isn’t whether or not the website is cutting edge. The one factor upon which your hopes and dreams rest, the one thing that determines whether or not your business will succeed is cashflow.
That is, the ability to maintain enough cash in the business to pay for expenses, such as equipment, overhead such as lighting, rent and heat, and of course, to pay the owner. After all, its why you started your business in the first place right? With this in mind, you may want to consider unsecured business loans to aid in cashflow.
That said, there are times, especially when your business is just starting out, where you will need more cash than you have on hand. Here again, unsecured business loans can be of great help. But have you stopped to consider some of the advantages of them? For one thing, as opposed to secured business loans, where you have to have some for of security to offer the lender (your house, or car for instance) unsecured business loans require no such thing.
This in and of itself is a great advantage, especially when you’re looking to access cash quickly, whether it be to move your business from the garage to an actual office, or to purchase much needed software or computers, or even to start the hiring process and ensure you can actually pay your staff at the end of the pay period.
Another advantage of unsecured business loans is that should you be late, you may not pay late fees. Say that the monthly payment on the loan is due on the 5th of the month, but the business can’t pay it until the 10th. This is not a problem as there is a grace period during which you can pay the outstanding monthly payment without late charges. Why would the lender do this?
Simple: they understand that if you (and your business) have a good experience with them, you will most likely come back for more unsecured business loans and be more likely to recommend their service to your friends and family. This ultimately means more customers and income for them. In short, they’ll want to make the process of obtaining unsecured business loans as easy as possible. Just don’t go in unprepared.
Finally, another advantage of unsecured business loans is the fact that the funds can be used for anything so long as it relates to the business. This of course covers a lot of ground and doesn’t just mean use for equipment purchases or overhead.
It can be used to obtain the first in a fleet of company trucks for instance. And it can also be used to offset entertainment expenses (i.e. food) incurred provided that it was during the course of business, say, having a lunch meeting with a potential client.
Decide on a Loan with Care
You could be considering accepting one of the hundreds of advertised proposal on TV and newspapers for a personal loan which will combine all your debts into a single account for easier management of payments. Prior to calling them and filling out that form, you have to assess your present state of affairs and the possible repercussions on your finances. Because all these proposals are sugar coated to entice you to get their facilities yet they are not as perfect a solution as the lending companies make it appear to be.br>
It is but natural for a lot of individuals to look at exceptional deals with cynicism, and ask, “Whats the catch?” For most of us, when it comes to consolidation loans, we generally just look at the amount that can be borrowed and the corresponding monthly payments, disregarding the other terms and conditions of the contract.
Loan companies know the general psyche of a potential borrower only too well, so the proposals highlight only the loan amount and the monthly payments to determine which loan term we can afford to pay, without detailing what portion of the payment is actually going to the principal debt.
We have been made to believe that by combining all our loans, it will simplify debt repayment. What we do not look into more closely is how many years will it take you to pay back that loan and how much the total payout will amount to. No matter how light the monthly repayment scheme is made to appear, computing it against the total number of months, for instance 60 of months, of repayment could give an unbelievably staggering amount.
Put the payment terms in an annual setting and see if that will not change your entire perspective. After doing that, the next question you will ask yourself is will you want to be saddled with such a debt for five long years. If that looks okay with you, the next thing you have to do is compute how much will this consolidation loan going to cost you given the 5 year term. This might jolt you to reality and change your mind completely.
Generally, interest rates for these types of loans fluctuate from year to year. Sometimes they could go down and that will be good for you, but most of the time it is on the uptrend. So if you finally decide to consolidate your debt, dont just look at the monthly repayment affordability but the total amount it will cost you for the entire loan term. Another question you should ask is if you are able to, can you pay the loan in a shorter term than that which is stipulated, because if you can, then it is a good option to take.
Clearing all your debts in one action will actually give you a feeling of relief and happiness, but should come with a warning.
NEVER EVER even think of using your cleared credit cards again or you will suffer the consequence of ending up in more debts than you can afford to pay. This will totally put you in a financial glitch that may take you several years to recover from.