Unsecured Loan Companies Offer Short-Term Business Financing

2008-10-06 09:57:37

( Financial )



It is common in business cycles that your company might run out of sufficient cash flow. This is particularly true when you have to finance a project, and before the project has been completed, the business experiences a cash shortfall before its long-term financing has been approved. In the meantime, you can approach unsecured loan companies to ask for short-term financing for your business.

Stricter Lending Requirements

This short-term financing from unsecured loan companies do not require you to put up specific assets as collateral. When unsecured loan companies approve unsecured loans to businesses, it is done based on the assumption that the loans will be repaid in full amount when they become due and demandable. Hence, the chance of unsecured loan companies of not getting paid is negligible. For this reason, your company must have a sterling credit rating to qualify for unsecured loans. If you are a start-up business, then you may not meet the strict requirements of unsecured loan companies on this type of lending.

When unsecured loan companies decide whether to grant you the financing, they normally look at these requirements: your company's credit history, the status of your cash flow and its profitability, the longevity of your company, the management stability, and the project's financial prospect.

Usual Repayment Period

In most cases, unsecured loan companies would only offer unsecured loans which must be repaid in a year. When the maturity date of unsecured loans goes beyond twelve months, the risks on unsecured loan companies that the loan will not be satisfied become greater. There is a chance that the financial status of your firm might deteriorate a year after you take out the unsecured loan. And although you might be able to obtain a loan with longer than one year repayment period, unsecured loan rates are usually higher than those with one-year maturity date.


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