Pre-qualify For An Unsecured Loan!
It’s a scenario many people don’t consider. Imagine you live in the city. Because you live in the city, you use public transportation. Because you live in the city, you rent an apartment. What will you use for collateral if you need a loan? The no collateral loan was devised for this scenario.
Now, imagine a different scenario. This time, imagine you opened a restaurant just a couple years ago. You lease space in a hip, upcoming neighborhood, and you rent the apartment above it. You own the coolers, freezers, ovens and dishes. What will you use for collateral to replace your aging equipment? Voila! The no collateral business loan is an ideal fit.
While the no collateral loan might not be available from a small local bank, there are literally thousands of online lenders who specialize in the no collateral loan. Is it a little harder to obtain? Of course it is; the lender is taking a greater risk. Is it a little more expensive? Again, yes.
A borrower typically has to meet a higher standard to qualify for a no collateral loan. Lenders want to see a higher credit score, and in the case of business borrowers, they want to see a longer history of positive cash flow and a business plan that indicates a high likelihood that the borrower will be able to cover the repayment.
However, because of the intense competition from online lenders, the interest rate for a no collateral loan isn’t as high as many imagine. Moreover, it is usually lower than that of business credit cards.
The exception to the assumption of a lower interest rate is the borrower whose credit is not quite up to most lenders’ standards for a no collateral loan. Fortunately, the competition among lenders has created an even more specialized, risk-tolerant, niche market to meet the needs of borrowers who need a no collateral loan, but cannot meet the standards of other lenders.
In that case, the borrower can expect to pay a higher interest rate. But imagine this scenario: You need a loan, but have no collateral and few options. It’s good to know you’ll be able to get a no collateral loan, isn’t it?