What Is an Unsecured Loan?
Rather than having any type of collateral, when a lender loans their money to a borrower purely on the worth of their credit history, it is called an unsecured loan. Unlike secured loans, where the lender has some kind of assurance that they would get their money back, unsecured loans are extremely risky and usually have a much higher interest rate than normal loans due to the lack of any collateral against these loans. Thus, it is usually quite difficult for people to get these loans as high credit ratings are sometimes necessary to get the loans approved.
Best Loan Type for Unsecured Uncollateralized Business Funding
There are numerous loans that are being provided by a huge number of banks in the US to businesses. Some of them are secured against some collateral, while quite a few loans are unsecured loans. Let us look at the best loan type for unsecured uncollateralized business funding to better understand what would be best for a business that can’t get a loan against a collateral.
Kabbage for Bad Credit Businesses
If you have a business that doesn’t have an appealing credit history but needs money as soon as possible, you don’t need to worry about it. Even though most banks might not approve your request for a loan, Kabbage provides a loan that could be accessed almost immediately once the request has been approved. However, you need to remember that the company has a very short loan term (6-12 months) and the APR is quite high. For a small loan, this is a good option, but our advice to you would be to steer clear of it if you want a large amount of money.
Fundbox for Short-Term Working Capital
If you are looking to borrow money for your working capital for a small period of time, Fundbox might as well be your best friend. The repayment period is really short, i.e., 12 weeks at most, but you get money in your hand on the next working day. What you need for this, however, is to meet its minimum revenue requirement of $25000 annually. You would also need to be in business for at least the last six months. If you can see to it that the two requirements are fulfilled, you can get the loan as soon as possible.
OnDeck for Good Credit
For someone who has a good credit history, almost all banks would be willing to lend them money. OnDeck is one company that would be best for business owners who have a good credit history and need to either pay for some unexpected expenses or have working capital that is required as soon as possible to manage the cashflows.
The requirements are a bit less stringent if it is compared to what the market is offering to its customers, as the APR is relatively quite low and ranges from 14-40%. You would, however, be asked to have at least a 600 credit score for your application to get approved and be in the business for at least a year. Moreover, they would see to it that you have had an annual revenue of $100,000 is the years that you have been operating. If these requirements are fulfilled, you don’t need to worry about any loan as you can get your hands on one in just a few days. The service is fast so that all unexpected expenses could be covered easily.