Finance & Share Markets

Capital Markets

This Is All You Need To Get Collateral Free Business Loan

The 2008 financial crisis has brought in place a new door of opportunity for small businesses to get the much desired financial loan that is needed to move businesses in the right direction from banks. Getting the required collateral through banks is however an issue; this is welcoming you to the world of alternative lending.

The Preambles

No matter the size of your business concern, you are entitled to unsecured financing which you can get through several alternative lending sources. You will get the loans through these sources without any form of collateral; however, you will require paying higher interest rates as compared to what obtains from the traditional banks. Qualification for the loan will be based on your credit history and the record of your revenue generation ability. Getting the loans is easier through alternative sources; however, some measures have to be in place to ensure a successful application. The following steps are mandatory:

Create a Solid Business Plan

If you want your loan application to sail through without any form of the bottleneck, then you have to get yourself prepared adequately well by equipping yourself with a solid business plan. Your creditworthiness is a factor. Further, you have to show proof of a solid revenue generation base if you want to pass through the process without issues. What is your business purpose and how do you intend to make money? What are your detailed financial statement and your cash flow projections? Above all, how will the loan affect your business? The details of all that and several other related issues should be tidied up before you step out to approach the lender. When questions bordering on any of the above areas are asked, you should be in a position to give solid answers.

Double-Check Cash Flow Projections

Just like it was stated earlier, there are high-interest rates on unsecured loans and this is the reason why you have to make all assurances doubly sure towards ensuring that you are ready to meet up with the challenges that come with the loan repayments. The annual percentage rate can be 10% and it can be triple this amount for some lenders. You must not be in a hurry to get the loan because failure to repay as at when due will damage your credit score which will make getting future loans impossible. Make assurances doubly sure on your cash flow projections and ensure that you have sufficient funds to repay the loan.

Clean up Your Credit

Another step that you are strongly advised to take before you go for the loan is to make sure your credit score is tidy. This is necessary to avoid paying a higher interest rate on the loan. Though with bad credit, you can get the loan you have to be prepared to face the consequences of paying a higher interest rate on such loans. Make sure you raise your credit score to a respectable level by cleaning up your credit score. Your credit utilization ratio accounts for 35% of this score; attempt to lower this score and you will be on your way to raising your credit score. Where your total debt exceeds 25% of your available credit, you must do something drastic about it before putting in for the loan. Pay as much debt as you can to improve on the credit score and check on reporting errors that you can remove. At that stage, do note tempted to open a new account.

The Lenders

Having taken the steps detailed above, you are now ready to apply for the loan without collateral. A lot needs to be done here as well if you want to get the best on offer meant for you among the options that are available online. The majority of the vendors will give you one promise or the other; the mode of operation varies from each other. Get prepared to invest time into research that will reveal the best among the available options online. What is the type of lending on offer, their required qualifications expected from each lender, what about the repayment fees? All the factors mentioned should be considered before your final decision is made among the online options. If you have taken time to put in place all the measures advised above, then you should invest quality time to get the right vendor online that will work in your best interest. This is the final stage of the process and the most important because a wrong choice will never be in your business interests.

Conclusion

If you can follow all the steps advised above, then getting the collateral-free loan that will give you desired peace of mind will be achieved on a platter of a diamond. It will be a win-win situation for business because the lines will fall in a perfect place for you.

 

Investment Banking Areas Explained

Capital markets are one of the most fascinating areas of investment banking. Companies need these services when they are about to go public or want to issue debt sold to the public. When a company wants to raise equity, we talk about ECM, standing for Equity Capital Markets, and when it wants to raise debt, we talk about DCM, standing for debt capital markets.