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Obtaining Bad Credit Unsecured Loans

Apr 21, 2008
Business is booming. Sales have been off the charts, and you're business has just begun a new expansion project. Then the unthinkable happens. The economy slows, consumers begin to be more hesitant to part with their money, and your sales dip to the lowest they have been in years. To make matters worse, that new expansion project has drained a large portion of your cash reserves, and your cash flow is drying up fast. You need a loan, and you need it quick if you want to keep your businesses doors open.

If the company is established, and has build a solid credit history, getting a loan to keep your business afloat may not be very difficult. On the other hand, if your business is newer and hasn't established a credit history, or if the business has had financial difficulties in the past, many lender will be very hesitant to give your company a conventional loan. If the business does qualify for a loan, the interest rates are likely to be through the roof. It may be that the terms of the loan are so unfavorable it would negatively affect your cash flow for years to come.

Fortunately, there are options available besides going through your local bank for a loan. It is possible for your business to obtain a bad credit unsecured loan. There are lender out there that will be willing to lend money to your business even if you have had credit problems in the past. If you haven't filed for bankruptcy in the past 10 years, some lenders are still willing to do business with you.

Despite being considered bad credit unsecured loans, these lenders have developed ways to ensure repayment of the loan even though it isn't secured in the traditional sense. Although there is still no guarantee that they will recoup their investment, they have minimized the risk.

One way that lenders do this is by loaning the business money based on past credit card transactions. The lender "purchases" a percentage of your credit card sales. When you apply for the loan, the lender will require to see credit card transaction reports for a certain period of time, typically three months or longer. They will then loan your business the money, but will receive a given percentage of credit card sales until the loan is repaid. This way, as long as you are in business, they are guaranteed to receive payments on the loan.

There are two types of loans to consider when looking for bad credit unsecured loans. The first is the conventional "lump-sum" loan. Once the terms are agreed to, a lump sum payment is transferred to your account, and interest will begin accruing on that amount.

The second type to consider is a line of credit. With a line of credit, an account is set up, similar to a checking account, with a maximum amount available for your business to use. This is helpful for businesses that will have cash needs over an extended period. You will be able to take out as much or as little as you need from the account. The biggest benefit of this is that you are only paying interest on the amount of money that has been withdrawn from the account.

Bad credit unsecured loans are available for your business. It may take some searching to find a lender that will meet your needs at a rate you can afford, but there is money available.
About the Author
David Castro often writes articles about Bad Credit Unsecured Loans and Small Business Loans for Merchant Resources International - To Learn more Visit Us at http://www.cashprior.com.
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