Unsecured Business Financing
An unsecured business loan is one that is obtained without the use of commercial property or assets used for collateral on the loan. Borrowers who have established a relatively strong credit rating can be approved for unsecured business loans. A credit history and a good business idea is all you need to get your company started in the direction you envision. While some competitors can offer unsecured business financing there is a vast difference between a loan that makes your dreams come true and a loan that will cause you nightmares. There are a few things to consider before taking on an Unsecured Business loan.
If you are looking to start a new business or company but can’t get the funding because you aren’t yet proven, it’s a story we hear every day. Proving yourself without the initial chance to succeed has been a problem for entrepreneurs for centuries. Lenders always like to look for a proven track record but sometimes as a visionary you have a strategy you know will work but you can’t yet prove it. That’s where Mission Valley Capital steps in to ensure that you not only get funding to accomplish the mission, but also reasonable payback terms that are easily managed.
As stated these business lines of credit do not require collateral and can include anything from small to medium business credit card solutions up to individual lines of credit for $500,000. How much the business owner qualifies for depends on the credit profile and the size and, if already established, profitability of the business. Start-up companies with no established revenue and a business owner or partner with a good credit file can initially expect to receive between $25,000 – $100,000 normally.
Example of a “New’ business owner who is a client of Mission Valley Capital: A gentleman approached us with no prior business experience (E.I.N. was filed for one day) and needed a $60,000 loan to fund a candy store he recently saw for sale in San Diego CA. He had a strong personal credit score but of course no commercial assets and no business income. He didn’t want to go into his savings to start the business. We were able to get him the money he needed within 14 days from time of application. With the loan he was able to pay a construction company to remodel the building to fit his needs. He was also able to pay for the first 3 months of rent, purchase all necessary equipment (assets now) and inventory. There was also enough to market the business properly for a grand opening. The easy payback terms allows him to concentrate 100% on getting his business up and running with everything he needs to be successful. Within the first few days of opening there was enough revenue to cover the minimum loan payback and within 10 days he was able to double the loan payback terms. With a 0% rate the first 12-18 months (depending on credit profile and the various credit lines) the loan functioned exactly as it should. Letting the business establish itself, the owner to pay staff and bills and not worrying about a loan that sank him deeper into debt with each passing month.
Most business owners will tell you that it’s the first year or two that are the hardest. Usually because the business has spent the money it thought it would need and has nothing left in reserve. The hidden expenses always pop up. The freezer breaks, the plumbing needs repairs, etc. You need to have a lifeline. Within 4-6 months of making minimum payments on the loan (usually 1% of total amount) you begin to establish a stronger business credit profile which allows you to access any rainy day financing you might need. There is nothing worse than spending all of your savings opening a company only to lose it because you can’t afford the unexpected things that pop up. And they always pop up.
Maybe you can show strong revenue but do not have the assets built up for additional financing needs. When you own your own company but do not own Commercial Real Estate or any commercial assets, an unsecured loan through Mission Valley Capital can get you the financing and payback terms you need to hire more staff, lock in more purchase orders at volume prices, expand through building or a going to a new location.
Established businesses with revenues of $1,000,000 up to $10,000,000 can expect between $100,000 – $500,000 with no collateral if they qualify with their financials and credit. These are A-Paper products so the rates are very good. They range anywhere from 0% introductory offers on all our business credit card solutions to 1-5% over prime for the larger lines of credit.
Example of Established business owner with Mission Valley Capital: A liquor store in Pacific Beach San Diego was doing $400K per month in sales but much of that was spent on staff, rent, expenses and inventory. The owner needed $100K to buy inventory at the best volume price. While his shelves were stocked, his storeroom was empty. Using the $100K he was able to buy a much greater inventory at a lower price due to the volume. By buying in bulk he made double the profit on every unit he sold while at the same time also lowering the price for the consumer. He not only made a wider margin of profit, he was able to pass the savings on to his customers which in turn increased the traffic into the store. Needless to say, paying back the loan early was easy. He knew exactly how much money he needed and we got it for him.
Too many lenders create terms that become impossible for an owner to manage, defeating the purpose of growing the business since the revenue is tied to paying back the loan. Mission Valley Capital has built a strong reputation in the investment community which allows us to provide a number of lenders with different products to choose from. As a CFL licensed California Company we are able can offer better terms than our competitors as well. We don’t offer “subprime” Unsecured loans so you’ll either get the good rates or you will not be approved.
We offer a No-Obligation Pre-Qualification that takes 10 minutes to complete. Feel free to speak to one of the partners at Mission Valley Capital on obtaining an unsecured line of credit.