This is the simplest method of obtaining working capital quickly and conveniently. It is also called unsecured financing because the loans are made without any collateral or lien on any asset. The unsecured lender has no prior claim on any property of the borrower.
Besides working capital, these loans can be used to add facilities and equipment to current operations, for business start-ups, construction, improvements and many others. They can be made for terms as long as ten years and are generally granted to individuals or businesses that have demonstrated credit responsibility.
From our lenders' perpective, these loans are made to borrowers whose banks have said "no", which therefore makes them higly risky undertakings. Because of this high risk feature, interest on them is comparatively higher but very competitive.
Unsecured working capital loans are considered the very least expensive and are easy to handle and highly profitable for lenders who make them. This is the reason for the sudden rush of many high-risk lenders to this area.
Small loans from $15,000 up to $100,000 can be borrowed on this plan. Additional requirments and restrictions may be necessary on loans over $100,000. Loans are made up to a five year period but are revalued on an annual basis. Processing usually takes from six working days to a few weeks after receipt of a completed application and schedules.
Because these loans are unsecured and therefore highly risky, the lenders rely heavily on the individual's or firm's financial statements to determine credit worthiness. Loan approval rests heavily on the borrower's management experience, his personal credit records, and most importantly the ability to repay the requested loan. Where the ability to pay is limited, it may be supported by stocks and bonds, certificates of deposit, personal guarantees and highly liquid assets.
Borrowers ineligible for this plan of funding include: Borrowers with heavy debt and pressure from creditors, borrowers without demonstrated credit histories, and borrowers with less than 1 to 1 current ratio, i.e. current assets are less than current liabilities. A loan request should not exceed 40% of net current asset position.
Loans are structured to be repaid and amortized on a monthly or quarterly basis from cash-flow. Other payment plans may be negotiated.