As a businessperson, you will at some point need extra money to suffice your operations – whether it is to boost your inventory, pay your workers, purchase new equipment, or expand your business. But in this tough economic time, it can be challenging to get it from peers. The next best option is applying a loan (check out Loanski for more details). In such a case, you will need to choose between loans with a guarantor and loans without guarantors.
In this article, we will discuss why loans without a guarantor are a good idea for businesspeople. But first, let’s have a look at the difference between the two options.
Loans with guarantor
These are secured or unsecured loans that need a guarantor to co-sign the credit agreement. A guarantor is a person who is willing to clear the debt if you are unable to pay it, and may include a close friend, family or anybody else who trusts you to repay the loan. However, a guarantor cannot be someone who is financially connected to you, such as your spouse.
When applying for this loan, you’ll need to provide the details of your guarantor. However, this person will only be contacted as a last resort, and are not often involved in repayments.
Loans without guarantor
These are loans that don’t require another person with a great credit rating (maybe your friend, family or any other person) to guarantee or co-sign the repayment of the loan. Meaning, you won’t need to find someone to guarantee or back you up when requesting the loan.
For this type of loan, you cut out the need to involve your friends and family, as you can apply for the money you need straight away.
Why loans without guarantor are an excellent idea for your business:
First, you don’t need to bother anyone
As a businessperson, you want to make your decisions as an individual (or partners) without having to involve third parties. A no-guarantor loan gives you the opportunity to get access to money without having to depend on others. It provides an incredible way for you to keep your business going without dragging someone through your projects.
Second, you still get access to the amount you require
You can still get the amount your business needs even when applying for loans without guarantor; and provided you pay the balance within the specified timeframe, you are good to go. However, you should note that your lender will analyse other aspects to establish your ability to pay.
Third, these loans are open-ended
Loans without guarantor require you to meet specific guidelines to be approved – and for as long as you meet the threshold, you can enjoy the freedom they offer you; and that is you get the funds you need whenever you need it.
Fourth is flexibility
Loans without guarantor also allow you payment flexibility, which is paramount, as it helps with planning. Depending on your credit history, financial situation, and the lender that you’re working with, you can repay from 6 months to 3 years.
