One of the biggest misconceptions that is prevalent among companies is that for applying an unsecured business loan least number of documents are required. While this might not be 100% true the statement is correct to some extent based on the type of unsecured business loan that your business needs. To determine what type of loan would be beneficial for your business, one needs to understand the different versions of unsecured loans and the paperwork associated with that loan. Therefore, a businessmen need to choose the right kind of unsecured loan for running business and to do that, a detailed overview of the unsecured business loans would come handy. For ease, here is a comprehensive view of the different types of unsecured loans with all its features.
Personal Loan
Being in a hurry, a personal loan can form a perfect loan support for your business. To get such loans, an inspection of income and repaying capacity will be checked, besides scrutinizing credit score. The usage of funds and expenses will be balanced and analysed to determine the loan amount and the tenure for which the loan will be awarded. It hardly takes a week for the full procedure to complete and there is certainty in getting the loan disbursed faster than any other modes. If the loan application and statements meet the requirement of the bank processes, then loan is disbursed even before the 7-days.
Credit Card
If a businessman is looking for a flexible plan and feels that expenses will be incurred mainly with credit and will be repaid monthly from your business profit, then there is no better a choice than that of a credit card. If the right amount is repaid at the right time, interest will be eliminated completed. On the other hand, total credit can be broken down into several EMI’s to be repaid in intervals, in such as case interest rates will be applicable. This will not create burden on small businesses that are unable to repay huge amounts and at the same time, the interest rate that will be paid is much lesser. However, the credit amount that will be awarded to small businesses will not be a large amount. Therefore, depending on the loan amount that is required a businessman can make decisions or can move on to the other options.
SBA Loan
Small business administration loan type is dedicated for the startup business. The application process for such type of loans require a complicated paper work besides other issues. The first one is the hassle of completing a paperwork, which has to be submitted to the banks and the bank have to inturn submit to the underwriters. The list of the documents included under such type of loan applications require submission of a business plan and the feasibility analysis too. Therefore, the entrepreneur needs to submit a plan that is bankable and banks or underwriters can vouch for its continued operations. The second disadvantage associated with such loans is that it involves a time taking process. The timeline can even range from 45 days and 90 days. This is mainly to gauge the bankability of business plan and to check if the businessmen is likely to go bankrupt.
Conclusion and the way forward
While it is common scenario that loan applications are easily rejected due to a number of reasons such as low credit score, lack of financial statements among others, there is yet another type of loan which can meet your requirements. This unsecured loan is settled within 2 weeks and does not require checking of credit rating as well. These are the loans that one can ask for from either a relative or a friend. It requires just an informal agreement between the person or the lender and the borrower. Although, both the parties might have to agree on the terms that are finalised during the lending process thereby eliminating delays in getting loans for businesses
