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What are the Ups and Downs of Guaranteed Loans for a Small Business?

The lending marketplace has plenty to offer for businesses of different scales. A number of options are available, which comprise varied features and advantages.

There is no scarcity of loans available for the businesses. Still, two things matter here:

  • How does a particular business utilise a particular loan?
  • Will that loan applicable for every sort of business?

Both these factors matter a lot. The business owners have varied financial aspirations or needs for which they need a loan. Not all of them can use the loan in the better way. They either make a mistake or try to borrow more than their actual needs.

It is an unfair practice at all.

Another aspect is the efficiency of the loan. You need to understand one thing that one loan cannot fulfil the different aspirations of different businesses.

It is because a small company has the need which quite poles apart from the large ones. Similarly, medium scale businesses have their own requirements.

The lending institutions, on the other hand, have their own aspirations too. They want to attract every level of business. Therefore, it is their compulsion to advertise their financial products as such where they insist companies bad credit no guarantor loans.

In this blog, we will do a comparative analysis of these loans. We will discuss all the pros and cons of these loans or a mere advertisement.

What is defined as 100% guaranteed loans?

If we go according to the tradition and prescribed norms, there are no loan products as guaranteed loans. In fact, lenders are restricted to advertise their loans available on guaranteed approval.

Still, many lenders do that, and some of them do it in the genuine way. Of course, they cannot guarantee the loan, but lenders can advertise the same if the borrowers can commit to these aspects. These aspects are:-

  • Providing a guarantor; or
  • Pledging the collateral; or
  • Placing the loan application with steady income

Fulfilling any of these aspects will make any business eligible to get 100% guaranteed loans, but with some conditions.

Furthermore, the loan amount, term and interest rates are also depending upon these aspects. Let us further discuss the nuts and bolts of these loans available on full acceptance.

Positive Elements of Guaranteed Loans for Small Business

small business loans

First, we discuss the advantages that these loans bring for small businesses.

Assured Funding Help in Any Situation

While running the business, you will have to face certain situations. Sometimes, you have good revenues to generate by getting significant projects.

At another point, you struggle hard to maintain the steady cash flow because your expenditure has increased compared to revenue. You will have to face these circumstances time and again.

With having guaranteed loan approval at your side, you can better manage those situations.

No issue of your business bad credit

You have provided either the guarantor, collateral or steady income as the loan guarantee. Now, lenders are convinced that they will have the loan repayment under the prescribed schedule.

With such surety of the loan repayment, some lenders do not mind if the borrower has mentioned a bad credit score in the application form. They allow loans based on their businesses’ recent performances.

Chance of quick funding

Guaranteed approval means you are about to get funding into your business bank account. However, you have to understand here the difference between traditional lenders and modern-day online lenders.

It will be better if you choose online lenders for small business loans when it comes to quick funding. They ask for an online loan procedure where not much documentation is involved.

Loans can be used for any purpose

Lenders have approved loans for you based on the loan guarantee. You have instant funding, too, so now you can use the borrowed sum for your business purpose.

You need to borrow the amount for the proper purposes. For instance, your business is going through a financial emergency. You should ask for that amount only which is enough to tackle that urgency.

Negative Elements of Guaranteed Loans for Small Businesses

Despite many positive aspects, guaranteed loans have some disadvantages, which you need to think about.

  • Finding the right loan deal from a trustworthy lender is quite a challenge. Many fake deals are available in the marketplace advertising 100% loan approval.
  • You are running a small business, and you need a smaller loan amount. You should know that short-term loans have the higher interest rate than longer ones.
  • If you are providing an asset to secure the loan amount, you are at huge risk. You may lose possession of that collateral if you miss the repayments in between.
  • There is more chance of getting the loan on your steady monthly income. You have bad credit, and no one would agree to become your guarantor. You do not have a high-value asset as being a small business owner. In such a situation, you cannot get more considerable funding for significant financial goals.
  • Lenders offer guaranteed loans, which means you can be careless of applying for loans again and again. Applying for too many loans can affect your credit score, and if missing repayments can take your credit score to the very bad category.

The Final Talk

The above discussion clearly reveals that guaranteed loan approval is just a phrase to ensure the small businesses that they can get loans in any situation. Of course, it is part of lenders’ advertisements as well.

The most significant output that comes from our comparative analysis is that you need to do your preparation hard. First of all, you must have a trustworthy lender who can offer you flexible loan terms. Flexibility is the key feature to get affordable loan deals.

Thus, you may be running a small business, but your aspirations are enormous. The lending marketplace has sufficient financial backups in the form of small business loans. If you utilise them properly, these loans have the features of ensuring much-needed funding support.

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