Unsecured small business loan spotted in Pacific Northwest

There are some common misconceptions about obtaining an unsecured small business loan. Among them is the notion that the best place to obtain an unsecured small business loan is through the Small Business Administration (SBA). Many business owners believe business loans are only available for established, long-profitable businesses. Another mistake is the belief that business loans have to be secured.

Let’s clear away some of the clutter.

First of all, the SBA does very little direct lending; rather, they guarantee that approved traditional lenders will receive payment on business loans even if the borrower defaults. There are many benefits to taking advantage of SBA lending programs, but the application process is complicated and lengthy. And, it’s at the lenders’ discretion as to whether to demand collateral or provide the borrower with an unsecured small business loan.

Startup loans are generally available to businesses in their second or third years of business, and approval is based almost entirely on applicants’ personal credit and financial statements.

There is a nugget of truth in the idea that an unsecured small business loan is hard to find; they’re rare, but not extinct. Nearly all business loans are secured with equipment, inventory, real estate or other financial assets, but it is possible to obtain an unsecured small business loan.

The secret is in knowing where to look for one. America One Unsecured can help with that. Before you tie up your business assets, contact America One Unsecured, a loan-consulting firm in business since 1999.

Unsecured loan or secured loan: which is better for you? You could fill a page with the pros and cons of each, but the question may be moot if you’re an apartment dweller or don’t own a car. Unless you have financial assets—certificates of deposits, a 401(k) or 403(b), stocks or bonds—you don’t have the collateral necessary for a secured loan.

But that isn’t necessarily bad news.  It’s a new piece of good news, but not owning your own home and taking out an unsecured loan is now an advantage if you lose your job. Just like apartment dwellers, mortgage holders have been laid off by the millions. And, those newly unemployed unfortunates who secured loans with their houses now are at risk of losing their homes if they can’t make their loan payments.

The same goes for any other assets put up as security for a loan. An unsecured loan provides a sort of financial security. If the time comes when you can’t make the payments, your assets can’t be repossessed; take out a car loan and the car is the security for the loan, and will be repossessed leaving you with nothing but the receipts for payments made.

That’s just one of the nuggets of conventional wisdom that’s fallen by the wayside during this recession. It’s a well-known fact that an unsecured loan has a higher interest rate than a secured loan, but the spike in credit card rates mitigates the disadvantage for those whose only option is an unsecured loan or credit card debt.

An unsecured loan almost always has a lower interest rate than the current ridiculously high interest rates on credit cards.

Personal Loan Rates a Better Bargain for Debt Consolidation

It’s more than a little ironic that most people borrow money to cover expenses they can’t afford, yet some loans and credit cards come with interest rates so high that they’re unaffordable. That used to be the case with personal loan rates, but right now they’re a lot less expensive than many credit cards.

Today, the average interest rate is down to 12% for unsecured personal loans with terms ranging from 12 to 60 months, but there are a lot of banks offering personal loan rates lower than that.

Compared to average credit card rates of 11.68%, the average personal loan rates are slightly higher, but because revolving credit card accounts have variable interest rates compared to the fixed rates of personal loans, personal loans are the better bargain. And, of course, 33% of credit card issuers have raised their interest rates this year, many as high as 29.99% or more.

To get some idea of how much money those lower personal loan rates can save when used for debt consolidation, take a look at these figures:

• Today the average household carries $8,924 in total credit card debt. If that household is among the millions whose interest rates have been increased to 29.99%, the five-year, payoff will cost $288.67 per month.
• In comparison, if the credit card debt were paid off with the average personal loan rate of 12%, in a five-year payment period the monthly cost would be only $201.23—a savings of $87.44 per month or $5,246.40 over the life of the loan.
• The average interest rate for balance transfer cards is now 14.54%, so if the card holders in the average household consider that route for paying off high interest cards, they can expect to pay $210.15 monthly, in addition to the balance transfer fee that is typically 3%.
• So again, using the credit card debt of an average family, the balance transfer fee will be an additional $267.72.
• The total savings of using a personal loan to pay off credit card debt compared shifting it to a balance transfer card is $802.92.

When you do the math, personal loan rates are by far the better bargain.

Sometimes balancing a budget is like standing on the bank of a creek, wondering if you can make it to the other side in a single leap without landing in the water. Those are the times short-term personal loans can help bridge the gap.

Examples from my own life:

• My husband bit into a piece of pizza this week and broke off a molar. He saw the dentist yesterday and was quoted $1,179 for a crown. Right now he’s in no pain, but if that changes, we’ll probably look into short-term personal loans.
• I’ve lost my bifocals. Under ordinary circumstances I could replace them without much of a hardship, but the holidays are upon us, and our budget is stretched thin already.
• Ordinarily, we’re able to cover additional holiday expenses without going into debt, but this year we committed to buying gifts for three boys from a disadvantaged family … and then a family friend suffered a serious injury, and we offered to help buy gifts for her two girls, too.  Given the financial situations of both families, even short-term personal loans are out of reach for them, but my husband and I still have jobs, so will be able to acquire loans if we have to.
• And, in the midst of all this, our dog has gotten sick, and this week’s trip to the vet’s office cost nearly $400.

We’ve never taken out short-term personal loans in the past, but there does seem to be a “perfect storm” gathering, and if the rains come, the creek may become dangerously flooded.

While short-term personal loans sometimes come with high interest rates, because so many credit card issuers have recently jacked-up their interest rates, the short-term personal loans may actually be cheaper. Besides that, many people have elected to close their credit card accounts to avoid the higher interest rates, meaning short-term personal loans may be their own option for making it to the other side of the creek.