How Small Business Lenders Quote Costs
An unsecured loan is simply a loan that does not require the business owner to provide any collateral or security to back the loan.
Small business lenders have now stepped into the gap, and they provide Unsecured Loans to small business owners.
It is not uncommon to apply, and have funds in your bank account within 48 hours.
Unsecured loans have opened the doors for smaller businesses to qualify for business funding where they previously would have to turn to a very costly personal loan.
Annual Percentage Rate (APR) - What's the deal?
An unsecured loan is characterised by two features:
- A fixed repayment term
- Fixed repayment amounts
Unsecured loans are generally short term. This means repayment is generally no longer than 2 years.
A typical repayment term can range from 3 months through to about 24 months. It depends on your preferences, and the lender.
Repayment of an unsecured loan is very simple. You will generally pay a fixed amount over a set period (every week, second-week or month).
The repayment amount is generally made up of two components:
- Capital repayment: The repayment of the amount loaned
- Interest/fee repayment: The repayment of the cost/fee that the lender has charged for the loaned amount
The portion of each component which you pay depends on the lender.
As an example: Some lenders like to recoup a large portion of their Interest/fee's in the early stages of the loan.
Let's say you loaned R100 000 for 6 months, at an interest rate
How to Qualify for a Small Business Loan
There is no one answer to find what the qualification requirements are for a small business loan.
As a good rule of thumb, though, these are the general qualification requirements:
- A minimum trading history of 6 months: That means you have been earning revenue for 6 months or more.
- A minimum monthly turnover of R30 000: That means for the 6 months (or more) that you have been trading, you must have earned at least R30 000 on average in each month. That equates to an annual revenue of around R360 000.
Other than that, you need to have:
- A registered business, and
- A business bank account.
Different Types of Finance Qualification Requirements
Each different type of finance has different qualification requirements. You can reach about each of them, here:
- Unsecured Loan Qualifying Requirements
- Merchant Cash Advance Qualifying Requirements
- Property Backed Loan Qualifying Requirements
- Invoice Discounting Qualifying Requirements
- Purchase Order Finance Qualifying Requirements
- Trade Finance Qualifying Requirements
- Vehicle Finance Qualifying Requirements
- Equipment Finance Qualifying Requirements
If You Don't Qualify
Your best bet if you don't qualify for a business loan will be to look at crowdfunding options, or potentially a personal loan.
Remember, for a personal loan you will likely be required to sign personal surety, which is very risky.
The Most Affordable Types of Small Business Finance
How the Small Business Finance Application Process Works
The application is a simple process. Here are the 5 steps of a small business finance application:
Step 1: Apply through FundingHub
One application form will mean we find you loan offers from over 40 different small business lenders.
It's fast, and free, and fully online.
Step 2: Add Information and Documents
FundingHub allows you to pause an application, and finish at a later stage. We guide you through the different document requirements, and which lenders need what information.
Step 3: View Loan Offers
We will present you with a list of all your loan offers. This takes seconds to fetch, and the list will be continually updated as you add more information to your profile. We do this all for you so you can compare your business finance options in one place.
Step 4: Choose an Offer
All the specifics around, pricing, fee's, speed of funds and the different lenders is laid out for you. If you have questions, we've got an independent analyst who can help you choose the right offer. All you have to do is choose your best loan offer.
Step 5: Finalise Application with Lender
Once you've found your best offer, your application will get finalized with the lender. All that will be left to do is agree on amount, terms and pricing.
How to Choose the Right Small Business Loan
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