Business is booming. Sales have been off the charts, and you're business has just begun a new expansion project. Then the unthinkable happens. The economy slows, consumers begin to be more hesitant to part with their money, and your sales dip to the lowest they have been in years. To make matters worse, that new expansion project has drained a large portion of your cash reserves, and your cash flow is drying up fast. You need a loan, and you need it quick if you want to keep your businesses doors open.
If the company is established, and has build a solid credit history, getting a loan to keep your business afloat may not be very difficult. On the other hand, if your business is newer and hasn't established a credit history, or if the business has had financial difficulties in the past, many lender will be very hesitant to give your company a conventional loan. If the business does qualify for a loan, the interest rates are likely to be through the roof. It may be that the terms of the loan are so unfavorable it would negatively affect your cash flow for years to come.
Fortunately, there are options available besides going through your local bank for a loan. It is possible for your business to obtain a bad credit unsecured loan. There are lender out there that will be willing to lend money to your business even if you have had credit problems in the past. If you haven't filed for bankruptcy in the past 10 years, some lenders are still willing to do business with you.
Despite being considered bad credit unsecured loans, these lenders have developed ways to ensure repayment of the loan even though it isn't secured in the traditional sense. Although there is still no guarantee that they will recoup their investment, they have minimized the risk.
One way that lenders do this is by loaning the business money based on past credit card transactions. The lender "purchases" a percentage of your credit card sales. When you apply for the loan, the lender will require to see credit card transaction reports for a certain period of time, typically three months or longer. They will then loan your business the money, but will receive a given percentage of credit card sales until the loan is repaid. This way, as long as you are in business, they are guaranteed to receive payments on the loan.
There are two types of loans to consider when looking for bad credit unsecured loans. The first is the conventional "lump-sum" loan. Once the terms are agreed to, a lump sum payment is transferred to your account, and interest will begin accruing on that amount.
The second type to consider is a line of credit. With a line of credit, an account is set up, similar to a checking account, with a maximum amount available for your business to use. This is helpful for businesses that will have cash needs over an extended period. You will be able to take out as much or as little as you need from the account. The biggest benefit of this is that you are only paying interest on the amount of money that has been withdrawn from the account.
Bad credit unsecured loans are available for your business. It may take some searching to find a lender that will meet your needs at a rate you can afford, but there is money available.
source : http://www.articlesbase.com/
Tuesday, April 22, 2008
Tuesday, April 15, 2008
How Do Income And Credit Score Affect Unsecured Loans?
It is widely known that income and credit score are both requirements for loan approval. However, unsecured loans are loans of a special nature. The lack of collateral alters the requirements for approval and these two factors have a different relative importance when it comes to endorsement of unsecured loans.
When dealing with regular loans, a steady and provable income is a condition for approval and credit score, unless too low, will determine only the interest rate of the loan. Unsecured loans maintain these characteristics but due to the lack of collateral and the higher risk involved in the financial transaction, credit score acquires a greater importance. The income requirement also varies its behavior.
Income Requirements
There are mainly two kind of requirements related to income on unsecured loans qualification: Income Nature and Income Amount. As regards the nature of your income, it has to be stable and verifiable. Stable means that if you have a job you need at least six months on the same job and if you work on your own you need at least six months on the same or superior tax category than the minimum required.
As regards to amount, depending on the type of loan and the amount of money requested, you will need an income that will let you afford the monthly payments without sacrifices. Usually the installments do not have to exceed 35% or 40% of your income since it is supposed that you have other expenses and that unexpected situations may take place and you will need to have extra cash to cope with them.
Credit Score Requirements
Unsecured loans require a good credit score for approval. If you want a considerable loan amount, a flexible repayment program and low monthly payments you will need to show a good or perfect credit history free from stains and delinquencies. The last six months of your credit report will be scrutinized exhaustively and any problem may result in a loan decline.
There are however, certain unsecured loans that may provide small amounts for short terms with bad credit or even without checking your credit report at all. These last loans are cash advance loans that due to the lack of collateral are also considered personal unsecured loans. Though some lenders offer regular unsecured loans with less credit requirements, credit score is always an issue when it comes to qualifying for this type of loans.
Problems & Solutions
If you lack the income necessary for approval, you may try requesting smaller amounts or applying with the aid of a co-signer. The income requirement is based on the resulting loan installments which can never represent more than 35% or 40% of the applicant income. By reducing the loan amount you are also reducing the income requirement. The same happens if you request a longer repayment program but that is not always feasible.
A co-signer's income can be added to yours in order to meet the income requirement. The lender does not mind who actually pays for the loan installments later. He just wants to make sure that those who are legally bind by the loan contract have the necessary income to afford the monthly payments.
source : http://www.goarticles.com/
When dealing with regular loans, a steady and provable income is a condition for approval and credit score, unless too low, will determine only the interest rate of the loan. Unsecured loans maintain these characteristics but due to the lack of collateral and the higher risk involved in the financial transaction, credit score acquires a greater importance. The income requirement also varies its behavior.
Income Requirements
There are mainly two kind of requirements related to income on unsecured loans qualification: Income Nature and Income Amount. As regards the nature of your income, it has to be stable and verifiable. Stable means that if you have a job you need at least six months on the same job and if you work on your own you need at least six months on the same or superior tax category than the minimum required.
As regards to amount, depending on the type of loan and the amount of money requested, you will need an income that will let you afford the monthly payments without sacrifices. Usually the installments do not have to exceed 35% or 40% of your income since it is supposed that you have other expenses and that unexpected situations may take place and you will need to have extra cash to cope with them.
Credit Score Requirements
Unsecured loans require a good credit score for approval. If you want a considerable loan amount, a flexible repayment program and low monthly payments you will need to show a good or perfect credit history free from stains and delinquencies. The last six months of your credit report will be scrutinized exhaustively and any problem may result in a loan decline.
There are however, certain unsecured loans that may provide small amounts for short terms with bad credit or even without checking your credit report at all. These last loans are cash advance loans that due to the lack of collateral are also considered personal unsecured loans. Though some lenders offer regular unsecured loans with less credit requirements, credit score is always an issue when it comes to qualifying for this type of loans.
Problems & Solutions
If you lack the income necessary for approval, you may try requesting smaller amounts or applying with the aid of a co-signer. The income requirement is based on the resulting loan installments which can never represent more than 35% or 40% of the applicant income. By reducing the loan amount you are also reducing the income requirement. The same happens if you request a longer repayment program but that is not always feasible.
A co-signer's income can be added to yours in order to meet the income requirement. The lender does not mind who actually pays for the loan installments later. He just wants to make sure that those who are legally bind by the loan contract have the necessary income to afford the monthly payments.
source : http://www.goarticles.com/
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