Blogging On Finance

What Is a Startup Business Loan?  A company may need to have been in operation for at least one year before it is eligible for certain types of business funding. In the case of new businesses in need of funding sooner, a startup business loan could be a good option. A startup business loan is a form of financing made available to businesses with no or little business credit history. It is common for startups to obtain funding through term loans or Small Business Administration (SBA) loans, but they may also consider business credit cards or asset-based financing. Startup owners can also utilize less traditional financing methods like crowdfunding to access the working capital they need to launch and grow their businesses.   Why are startup loans for new businesses important? Starting a business consumes many resources. In addition to finding a market fit, hiring the right team, and ensuring your product is market-ready, you will need to find ways to cover your costs. This can be somewh

The cash obtained from a bad credit business loan can kick-start your business’s growth and help get your finances back on track.   Understanding Bad Credit Business Loans and Credit Score Business owners with bad credit may find it challenging to finance a startup or expand their existing businesses. Fortunately, bad credit business loans can make financing more accessible, even for less creditworthy borrowers and businesses without established credit histories. In addition to transparency in pricing and terms, the best lenders can quickly fund a bad credit business loan in one to two business days. Lenders typically consider both the personal credit score of the business owner and the business credit score when evaluating a loan application. However, the applicant’s personal credit score is of even greater significance for startups and other businesses without a credit history. To qualify for a bad credit business loan, a business owner must have a personal FICO score * of at least

There are generally two types of consumer loans available: secured and unsecured. The primary difference between the two is the presence or absence of collateral , which backs the debt and serves as a form of security to the lender against non-repayment.   What Are Secured Loans? Secured loans refer to those in which the borrower pledges an asset as collateral or security for the loan. A secure debt instrument means that the lender can sell the asset to recoup the funds advanced to the borrower in the event of default. The most common type of secured loan is a mortgage, in which the collateral is the mortgaged property. When a borrower takes out a mortgage, the property is used as collateral to secure the loan; the lender maintains an equitable interest in the property until the borrower repays the loan in full. If the borrower fails to make payments, the lender may repossess the property and sell it to recoup the funds owed. Likewise, if a borrower fails to make timely payments on a c

What Is a Recourse Loan? In recourse loans, the borrower is 100% personally liable for the loan amount. This could result in a lender repossessing or foreclosing the collateral stipulated in the loan agreement. If the lender cannot recoup the entire loan balance from the sale of the collateral, it may file a lawsuit and pursue the borrower’s other assets.  Some common types of recourse loans include: ✔ Personal loans ✔ Credit cards ✔ Auto loans ✔ Short-term real estate loans. Recourse Loan Example: If a borrower takes out a $25,000 auto loan to purchase a $32,000 vehicle, the loan will be secured by the car. Should the borrower, after several payments, default on the loan with $20,000 remaining, the lender may repossess the vehicle and sell it to recoup the outstanding loan amount. However, let us suppose that the car has depreciated and can only be sold for $18,000. In such a case, the lender may also seek a judgment from a court and garnish the borrower’s wages to recover the remain

What is a Credit Score? Credit scores are three-digit numbers, usually on a scale of 300 to 850, and indicate whether a borrower is likely to make timely payments on their bills. Besides providing lenders with a better glimpse into your creditworthiness, a credit score also allows financial institutions, insurance companies, and other entities to make faster decisions about your applications. FICO is the most widely used credit score by lenders. The Fair Isaac Corporation developed it.    What is Considered a Good Credit Score? Most lenders view credit scores above 670 as “good,” while official FICO scores between 670 and 739 are considered “good.” Borrowers with higher credit scores are likely to have better rates and greater chances of approval. FICO scores are categorized into five categories: poor, fair, good, very good, and exceptional. Below is a breakdown of the ranges: ✅ Poor (<580): Below average, and lenders will rate you as a high-risk borrower. ✅ Fair (580–669): Below av

When applying for a loan, lenders analyze your credit history to determine your creditworthiness and repayment ability. In this way, they can assess the risk associated with lending you money.    What is a No-Credit-Check Loan, and How Does it Work? No-credit-check loans are those in which the lender does not conduct a credit check on the borrower before approving and lending the money. When your credit is poor, and you cannot qualify for other types of financial products, these loans can be tempting. However, you should note that a no-credit-check loan is viewed as a higher risk for the lender. To balance this risk, many no-credit-check lenders charge exceptionally high-interest rates. Payday lenders and other companies that provide high-interest loans usually do not conduct credit checks and even offer guaranteed approval. Many of these loans are for a few thousand dollars or less with short repayment terms, which hamper the borrower’s ability to repay on time, resulting in a debt cy

If you seek a small business loan for a startup business or your next growth stage, the lender may request collateral to guarantee the loan repayment. However, it may be your top priority to secure a no-collateral loan for your business if your company lacks any assets that can serve as collateral. Fortunately, it is possible to obtain small business loans without collateral as a condition of approval. Listed below are the six popular options.   Options Available for No-Collateral Business Loans: ✅ SBA 7(a) Loans The Small Business Administration (SBA) provides loans to small businesses through a network of lending partners. When you need working capital, you might consider several SBA loan programs, of which the 7(a) program is one of the most popular. The SBA 7(a) program does not require collateral for loans of up to $25,000, which can be beneficial if you only need a small loan. For loans exceeding $350,000, the SBA requires lenders to use collateral to the greatest extent possible