UNSECURED LOAN TYPES
Business Credit Card | ||||
Credit Score | Credit Score | Credit Score | Credit Score | Credit Score |
Time in Business 3 months+ | Time in Business | Time in Business | Time in Business | Time in Business |
Monthly Revenue | Monthly Revenue | Monthly Revenue | Monthly Revenue | Monthly Revenue |
Loan Amount | Loan Amount | Loan Amount | Loan Amount | Loan Amount |
1.06 – 1.7 | 0% – 36% | 8% – 55% | 7% – 54% | 18% – 140% |
Benefits: Perfect credit not required. | Benefits: 0% intro APR’s, Spending Rewards. Points Rewatds. | Benefits: Only pay interest on funds drawn, Credit is available when you need it, It is suitable for the majority of business needs. | Benefits: Loans are approved quickly, No collateral may be needed, Little paperwork, Early Payoff Discount. | Benefits: Short term to funding, Not for long term solution. It’s a stop gap. Emergency. Not to live off. No collateral required. |
Drawbacks: Higher cost, Automatic payment. | Drawbacks: Variable rate, Possible annual fee. Appears on personal credit | Drawbacks: Don’t offer high approval and funding. Higher interest rates. Low approval rate. Not for low credit score, There is a personal guarantee. | Drawbacks: Credit window is a lot loose company to a line of credit. Shorter repayment term than bank loans. | Drawbacks: Higher cost depending on credit qualifications, revenue and sales history required. |
1 year tax return | Typically no docs. Honor system. | 1-2 years business tax returns | 1 year tax return | 4 months bank statements. |
4 months bank statements | 4 months bank statements | 3-6 months business bank statements | 4 months credit card processing statements | |
4 months credit card processing statements. | P&L and BS | 4 months credit card processing statement | 1-2 yrs tax returns. | |
Year-to-date Financials (P&L and BS) |
What is Unsecured Business Loan?
Unsecured Business Loans:
- Definition: Unsecured business loans do not require collateral. They are issued based on the creditworthiness of the borrower and their ability to repay the loan.
- Key Points:
- Collateral: Not required; the loan approval is based on the borrower’s creditworthiness.
- Risk: Higher risk for lenders because they have no specific asset to seize if the borrower defaults.
- Interest Rates: Generally higher compared to secured loans due to the increased risk for the lender.
- Eligibility: Typically requires a stronger credit profile and financial history.
- Examples: Credit cards, personal loans (if used for business purposes), and some lines of credit can be unsecured.
Comparison:
- Risk: Secured loans are less risky for lenders because they have collateral as security, whereas unsecured loans are riskier because there’s no collateral backing.
- Interest Rates: Secured loans generally have lower interest rates due to the collateral, while unsecured loans tend to have higher rates.
- Qualification: Secured loans can be easier to qualify for if the borrower has valuable assets to pledge, whereas unsecured loans require a stronger credit profile.
- Flexibility: Unsecured loans may offer more flexibility in terms of usage and may not require detailed asset valuation or appraisal.
Choosing between a secured and unsecured business loan depends on factors like the borrower’s creditworthiness, the amount needed, and the willingness to pledge collateral.
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From application to funding, your guide to unsecured business loans.
As a business owner, navigating the landscape of small business funding can be time-consuming. That’s why Liberty Capital has created a comprehensive guide for small business owners like you. This guide is designed to help you explore and understand all types of business funding options available when you apply with us.As a business owner, small business funding landscape can be time consuming, that’s why Liberty Capital has put out a guide for small business owners, like you, to use to navigate all types of business funding available when you apply with us.
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