Gaining an international unsecure business loan is sometimes a must. The benefits of having these loans are in gaining funds quickly and not having to liquidate assets to gain the funding you need.
Typically, an international unsecured business loan will be granted by an institution to corporations, financial institutions and high net worth individuals. High interest rates and the fact that these loans are unsecure will generally prevent Joe Taco Stand from taking out one of these. And they are probably doing Joe a favor. The interest rates are incredibly high (11-22% in some cases) and why Joe would want a $1.5 million loan at 22% is beyond me to begin with. Nope, for most people an international unsecure business loan is out of reach.
To understand how things work though, let's look at the criteria for an international unsecure business loan. Mostly you would have to already be in business or otherwise show where you have succeeded in business in the past. Like any other type of loan, having a proven financial record is required as well. The more stable your company and the longer profitable history you can show, the better you chances of getting the unsecured loan.
For the individual, the criteria are a little more stringent usually. You would need proof of money coming into your account on a regular basis and to show how much money is coming in. Mom's social security check would not qualify her for a $150,000 loan from a British financial institution. However, an inheritance, endowment or interest from several large accounts would suffice. A proposal of the type of business you would be opening as an individual would have to be set forth, so brush up your business plan and so that it cuts the mustard.
Interest rates are not always determined the same way. For example the LIBOR is the London Interbank Offered Rate and changes every day at 11:45 am London time. Knowing which rate your financial institution uses is important when you think about a difference of .5% of a few million dollars. Though markets are not well at the moment, some have slumped and are hurting a little more than others, keep this in mind as well. For example an international unsecure business loan in Poland would come with a 22% floating LIBOR which would means the rate is adjusted daily. This is a lot to keep up with. If there is no penalty for an early payoff on such a loan, then the daily rate (LIBOR in this case) would apply.
For the most part these loans are high interest and low duration. In other words they aren't like a 30 year mortgage; repayment can be due in as early as six months. Again, this is just not something recommended for the starting entrepreneur, even if they were to gain a smaller loan of $150,000. Repaying a loan like that in such a quick manner would be a hardship to some businesses unless they had a definitive plan of action. Businesses with a quick turnaround and an established source of ongoing income could benefit from these loans. As I said earlier, they are a good source of fast capitol that does not require liquidating any assets.
The question about international unsecured business loans is; are they worth it? The answer is in your business plan and lies with your CFO. They have their place in business.
International Unsecure Business Loan
Have a question for Zeeman?
23rd May 2014 3:02pm
Sir, i am interested to receive a loan for my grave pick project; i dont have collateral i am from Cameroon:Africa: