Business startup loans, as the name implies, are for those people or companies who want to start their own business. If you have a good business plan, you can start your new business efficiently; however, if you do not have sufficient funding or finances, you will not be able to implement you business plan. As such, you may avail of business startup loans to buy equipments, machines, business premises, and other resources to start you business. More so, even if you are in a bad credit situation such as arrears, bankruptcy, county court judgments, or defaults in repayment, you can still avail of these loans.Business startup loans can be secured or unsecured. If you opt for a secured loan, you have to pledge a valuable property to the lender as collateral. This loan is offered at a low rate of interest and specifically for long-term period. On the other hand, if you opt for an unsecured loan, you are not required to pledge any security against the amount of loan. This loan has higher rate of interest as compared to secured loans although approval and processing of loan is faster; thus, if you need immediate funding, you may opt to avail of this loan.
Some of the advantages or benefits you can obtain when availing of business startup loans include the following:
• Provides financial help if you are planning to start your new business
• Helps you take the first step towards starting up you business
• Designed to suit your needs for starting your new business
• Used to purchase equipments, machines, and other resources
• Application for loan is available online as provided by lending institutions, banks, and other credit companies
On the other hand, availing of these types of loans from banks, lending institutions, and other creditors can have risks involved. These institutions generally ask borrowers to fill up an application form that includes the particulars and brief description of you new business including plans and strategies. This is because they want to know the feasibility of your new business.
In other cases, some of these financial institutions may ask you for personal security or guarantees as collateral against the loan you want to avail. You need to give your valuable property or asset as security especially when you are applying for secured loans. Upon provision of such collateral against the loan, lenders are able to charge you with low interest rates and small monthly installment. Lenders are also able to give you long period of loan repayment.
For secured loans, you can have you loan repaid from 3 to 25 years, which depends upon the amount you have borrowed. On the other hand, a major disadvantage of business startup loans specifically for secured loans is that if you fail to repay on time even with a slight delay of making payments, the lender gains the right to seize or possess the property or asset in which you have made as collateral against the loan.