Unsecured Christian Small Business Loan
An unsecured Christian small business loan is one of several options available to entrepreneurs and small business owners. Whether or not it is the best option depends on a variety of factors involving the financial stability of the owners, the company itself, and, in some cases, the viability of the industry. Additional considerations include the purposes for the borrowed money and which option provides the best overall terms. When an entrepreneur first gets an idea for a company, the initial excitement can overshadow clear thinking. It's very important to create a functional plan that clearly answers basic questions about the product or service the entrepreneur wishes to sell or to offer in the marketplace. Writing a business plan compels an entrepreneur to conduct the necessary research to answer questions regarding the target audience, availability of vendors, and marketing opportunities. The owner of an established company also needs a plan in order to stay competitive. A well-done plan will include financial statements that forecast future income and expenses. An established company will also have financial documentation of past sales and expenses. This information will be helpful when applying for either a secured or unsecured small business loan.
A secured loan simply means that the amount borrowed is tied to a particular asset which acts as collateral for the financing. For example, a mechanic obtains secured financing to purchase an automobile diagnostics computer for his repair shop. If the payments are not made, the lender may choose to repossess the diagnostics machinery. In contrast, an unsecured small business loan is not based on collateral or a particular asset. Instead, it will probably be based on the individual's personal history of creditworthiness as reflected in his FICO score. The term FICO comes from Fair Isaac and Company, the firm that pioneered and developed credit scoring as a way to gauge an individual's ability to handle personal finances and repay loans. Using multiple variables and mathematical models, individuals are assigned a number from 365 (bad) to 850 (excellent). The number 680 is often regarded as a benchmark between a good and poor credit history. With an acceptable FICO score and qualified application, the mechanic may obtain an unsecured small business loan in less time and with less documentation than traditional bank funding. He can still purchase diagnostics machinery, but if payments are not made as required, the machine will not be repossessed. However, the lender will take steps to recover the borrowed funds which may include taking the mechanic to court.
An entrepreneur may have difficulty getting a traditional bank loan for a new venture simply because she lacks a track record. Most experts advise entrepreneurs to tap into personal finances for their new companies before applying for financing. Read enough stories about start-ups and a common thread emerges -- a lot of entrepreneurs finance their new ventures with credit cards. Though many people don't realize it, this type of financing is a type of unsecured small business loan. The individual signed an agreement for a revolving line of credit based only on the issuing company's qualifications. No collateral is required and very little documentation. But financing a startup or even an existing company with plastic can be a dangerous practice. Soaring credit card bills can strangle an entrepreneur's dreams. Sometimes entrepreneurs tap into their home equity to get the money they need to launch the startup. But this is also a risky plan. Should the startup end up shutting down, the individual is still stuck with home equity payments. Defaulting on this obligation is out of the question or the person could lose her home. The temptation to tap into a house's equity is seldom worth the risks. The dream will have a more solid foundation if time is spent before opening the venture to save as much cash as possible. Being prepared also demonstrates maturity and wisdom. "Happy is the man that findeth wisdom, and the man that getteth understanding. For the merchandise of it is better than the merchandise of silver, and the gain thereof than fine gold" (Proverbs 3:13-14).
When no other funding option works out, an entrepreneur or owner may turn to a lender for an unsecured small business loan. The online companies that offer this type of financing promote such benefits as no collateral and little documentation. Before applying for unsecured financing, the individual should read the fine print. It's important to understand the terms of the loan so there are no surprises. For example, the applicant will want to know if the interest rate increases after an introductory period and if there is a pre-payment penalty. Some lenders refer to their loans as cash advances. The applicant is actually selling future income at a discount as a way of paying back the advance because the lender takes a percentage of future credit card sales as payment.
Instead of tapping into home equity, using plastic, or applying for another type of unsecured small business loan, prospective entrepreneurs and small business owners may want to research the services provided by the U.S. Small Business Administration (SBA). This federal agency provides guaranteed loans to qualified applicants at low interest rates. Though the required paperwork and documentation can seem quite daunting, the end result may be a good source of financing. In addition to loaning money, the SBA provides many other valuable services to entrepreneurs and small business owners. With offices throughout the United States, the agency often hosts workshops and seminars that help prospective entrepreneurs learn the nuts and bolts of starting a venture and assist established small business owners reach new goals. Workshops on money management may help individuals determine whether a secured or unsecured small business loan is the best option given their unique circumstances.
Christian Unsecured Money LoansAn unsecured money loan can be obtained quickly to fill an immediate financial need, up to $1500, for those whose credit score will qualify them. It is any amount lended that does not require collateral for approval. Therefore, the potential borrower does not need to own a home or other large asset in order to qualify for an unsecured money loan. They are relatively easy to qualify for; however, because the lender depends on the borrower being able to repay the loan, higher interest rates and stricter rules usually apply.
Those whose credit may not be perfect but is still relatively good can benefit from unsecured money loans. Sometimes people get themselves into financial binds and are in need of a boost or float until they get their feet on the ground. This type of lending can be a temporary solution. Although borrowers do not need good credit to qualify, the better the financial history, the better the deal a borrower will be offered. However, those with poor or bad credit may still qualify.
Different sources offer unsecured money loans, but the best deals are often offered online, so it is best to check there first. Many sites will offer unsecured money loans, but it is important that the borrower check the company thoroughly, and go with a company with a proven track record. A good local source could be one's own bank. Borrowers should also ask people they know if they can recommend any lenders who would offer such services. TV and radio can offer some options, but consumers need to make sure these companies are reputable. "Oh let the wickedness of the wicked come to an end; but establish the just: for the righteous God trieth the hearts and reins" (Psalm 7:9).
The cost for these types of loans depend on how long the term is, how much is borrowed and who the lender is. Companies typically offer up to $1500, but the fee for the unsecured money loan is deducted from the loan amount, which needs to be taken into consideration when deciding how much to borrow. The interest rate, or the charge for borrowing, is built into the repayments over the term. Some companies allow early repayment, while other companies penalize borrowers for paying off early.
Many lenders are online and allow potential borrowers to apply quickly and conveniently with an online form. To qualify for an unsecured money loan, applicants need to be at least 18 years of age and have a checking account to which the amount can be wired. Also, they need to have a minimum amount of consistent monthly income, which is determined by individual lending companies.
Unsecured personal loans are funding agreements made between a financial institution and an individual to provide a lump sum of money to be used for any purpose without placing an individual's assets as guarantee for the funds. Unlike other personal loans, this type does not require a person to place their home or other property as collateral or security. Unlike some agreements, the funds can be used for virtually any purpose-a vacation, wedding, new car, home improvements, or for consolidating other debt. Specific non-collateral based funding is advantageous for non-homeowners and for individuals who need a one-time large sum of money for an immediate need. An unsecured personal loan typically requires less paperwork than a conventional financing agreement and approval times are faster. Amounts vary widely for these types, ranging anywhere from $500-$250,000, but more typical amounts are $1000-$3000, repayable on a monthly basis within a maximum of 3-5 years. The amount an individual can borrow depends on his or her credit history and current earnings information.
Since lenders carry more risk, not everyone can qualify. Those with bad credit are less likely to be able to qualify for an unsecured personal loan since the bank has no guaranteed property collateral. Also, due to the increased risk a bank assumes, these tend to be for much less money and offer a shorter repayment periods than a secured property loan such a home equity loan. Also, the interest rates are much higher than secured financing, typically 12-22% but still less than most credit cards. When applying for an unsecured personal loans, banks will ask to see current employment information, such as a pay stub, and will run a credit report. The amount an individual may be awarded is based upon one's earnings potential. With good credit, a bank may approve up to four times one's monthly salary for a year, but policies vary from bank to bank.
As with all Christian loans, it is in the consumer's best interest to shop around to find the best rate and terms different banks may offer. "He that worketh deceit shall not dwell within my house: he that telleth lies shall not tarry in my sight" (Psalm 101:7). Rates for unsecured personal loans can be fixed or variable and some lenders include prepayment penalties in the terms of the agreement. Even though banks do not require property collateral for an unsecured personal loan, defaulting on monthly repayments is not without its consequences. Penalties and fees for late or missed payments can be significant. Furthermore, a bank can pursue the borrower legally. Courts may order the confiscation of possessions to help repay the debt so borrowers should feel comfortable with their ability to repay the balance prior to its acceptance.