WHEN APPLYING FOR A LOAN :
DOCUMENTATION ----NO DOCUMENTS>NO LOAN.USUAL DOCUMENTS-- TYPED APPLICATION STATING: YOUR NAME, SPECIFIC AMOUNT OF LOAN REQUIRED, PURPOSE OF LOAN, EXISTING ACCOUNT WITH THE BANK IF ANY., YOUR PORTION OF INVESTMENT,IF ANY. AMOUNT YOU CAN REALISTICALLY REPAY EVERY MONTH. COLLATERAL SECURITY ,YOU ARE PREPARED TO GIVE AS SECURITY. BALANCE SHEET P/L STATEMENT,IF ANY. PROJECTED PROFITS AND PROJECTED CASH FLOW FOR THE NEXT YEAR DONE ON A MONTH BY MONTH BASIS. PROJECT REPORT IN CASE OF A NEW BUSINESS SHOWING CLEARLY,YOUR PLANS FOR THE FUTURE,TO SHOW THAT YOU KNOW WHERE YOU WANT THE BUSINESS TO BE HEADED.
YOUR PERSONAL EXPERIENCE IN BUSINESS. YOUR DEGREES OR CERTIFICATES THAT ARE RELEVANT TO YOUR BUSINESS. YOUR EXPERIENCE.
BE FULLY PREPARED WITH THE ABOVE AND YOUR WORK IS HALF-DONE.
NOW THE QUESTION IS SECURED OR UNSECURED LOAN.
A SECURED LOAN IS WHEN THE BORROWER PUTS UP COLLATERAL - IF THE BORROWER DEFAULTS ON THE LOAN, THE BANK HAS THE POWER TO SEIZE THE COLLATERAL. USUALLY IMMOVABLE ASSETS ARE GIVEN AS COLLATERAL.IN SOME CASES THE BANKERS MAY ACCEPT OTHER FORMS OF COLLATERAL TOO.
AN UNSECURED LOAN IS A LOAN IN WHICH NO COLLATERAL IS PLEDGED BY THE BORROWER. THESE LOANS ARE GENERALLY ONLY GIVEN TO BUSINESSES AND PERSONS THAT THE BANKS DEEM AS UNLIKELY TO DEFAULT. BUSINESS LINE OF CREDIT OR CASH CREDIT.
A LINE OF CREDIT OR CASH CREDIT IS AVAILABLE FOR THOSE UNEXPECTED EXPENSES AND THEY CAN BE USED IN PLACE OF A BUSINESS LOAN. THIS TYPE OF CREDIT ALLOWS YOU TO DRAW ON FUNDS, UP TO YOUR MAXIMUM ALLOWABLE CREDIT.
THIS OFTEN HAS A MUCH LOWER INTEREST RATE THAN A REGULAR CREDIT CARD WILL, MAKING IT A MORE ECONOMICAL CHOICE FOR BUSINESS EXPENSES. HOWEVER, INTEREST RATES R USUALLY HIGHER THAN THAT OF A REGULAR BUSINESS LOAN. THERE IS OFTEN AN ANNUAL FEE ACCOMPANYING A LINE OF CREDIT.
A NEED TO HAVE GOOD BUSINESS CREDIT IS A MUST TO GET THIS TYPE OF CREDIT FOR YOUR BUSINESS.AGAIN IT CAN EITHER SECURED OR UNSECURED,DEPENDING ON YOUR CURRENT CREDIT STATUS.
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