Any small business owner would agree that getting a business loan with no money down can really help get the necessary funds need to successfully run the business. Later on, if you can’t recover that money, you can file for bad debt. As and when the business repays the loans with interest, over a period of a few years, the collateral assets pledged as security are handed over back to the business. On the basis of the collateral offered and the performance potential of the business, the bank can decide the amount of loan it can sanction.
However in reality, there is no bank that will lend you money without some sort of collateral. Merchant loans are more expensive than business loans and the payback period is shorter too. Now, most of the time, these loans are unsecured. Small business loans are advanced to small entrepreneurs who invest it in a series of purposes like expansion of their facility, buying technology, purchasing new tools and equipments, and also to buy raw materials and pay wages to workers.
Interest payments on unsecured business loans are tax deductible, whereas purchases financed from profits are made out of taxed income. Sole traders and partners are liable for all the debts in a business venture, whereas with limited companies, the directors are liable only for the amount of debt they personally hold in the company.
With Stafford loans, you have the flexibility to repay the loan amount within a grace period of six months after you earn your graduate degree. Private lenders have a completely different list of criteria to provide cash advance for business owners. Only in very few cases are small businesses turned away by private lenders.
During the scrutiny of a commercial loan application, banks primarily check out the credit history and past performance of the business. You can use these funds for any purpose like paying off current debts. Private money lending is a boon to the borrowers, who are unable to procure money from banks and credit unions.