Secured Business Loans

By: EconomyWatch Content   Date: 28 December 2009

About The Author

EconomyWatch Content

Follow The Money

EconomyWatch, Content Team

 

  • Dot Div
  •      

Secured business loans are a type of loan where you pledge your assets as collateral or security. If you default on the terms, the lender puts your assets on sale and collects on the debt from the proceeds. Because this loan is secured with collateral, the rate of interest is lower than that for an unsecured loan.

Secured Business Loans: Pros and Cons

The advantages of secured business loans are:

·        Low rate of interest and related charges

·        A large amount can be borrowed

·        You enjoy a longer repayment period

 

The disadvantages of secured business loans are:

·        Assets might be at risk in the event of payment defaults

·        Repayment terms are often not flexible

·        Securing such a loan can be a time consuming process

·        There might be a penalty for early repayment

Secured Business Loans: Documents required

Usually, the documents that a lender will require before approving a secured business loan include:

In case of an existing business: Business profile, and nature and length of business ownership should be mentioned.
In case of a new business: You have to discuss your business venture and how the business would be successful enough to repay the loan over time.

Secured Business Loans: Sources

There are several sources to consider when looking for financing. It is important to explore all of your options before making a decision, such as:

 

·        Banks and credit unions: The most common source of funding, banks and credit unions, provide a loan if you can show that your business proposal is viable in the long term and would guarantee timely repayments.

·        Venture capital firms: These firms help ventures expand and grow in exchange for equity or partial ownership.

·        Personal savings: The primary source of capital for most new businesses comes from savings and other forms of personal resources. Credit cards are often used to finance small business needs.

·        Friends and relatives: Many entrepreneurs look to private sources, such as friends and family, when starting out on a business venture. Usually, the money is loaned interest-free or at a low interest rate, which can be beneficial going forward.

 

Online research is also very important to while deciding on secured business loans. The loan quotes that are sent in by the numerous lenders should be compared before you can select the best deal possible. Bad credit borrowers can also apply for secured business loans to fulfill their business requirements and also improve their credit history by making timely repayments.

 


  • Dot Div
  •      

Most Popular in Business Loans

Related Links
blog comments powered by Disqus