Bloans

Question: Do all business loans require a collateral, such as your house? are there unsecured business loans?

(Posted by: John Bob Bryant III on 2010-02-17 20:51:56)

What if it's a llc? how about a corporation? Thank You

Posted by: HL on 2010-02-17, 20:53:29

There are different types of debt you can use to capitalize your business (regardless of its corporate form -- corporation, llc, whatever). in your situation, a loan from a bank would probably require collateral. however, you can raise funds without giving up equity if you issue unsecured notes or bonds. be prepared to pay a high coupon, though, since investors in this economy are going to be wary. you also probably need to pay fees to an initial purchaser (akin to an underwriter) who will then go out and market your notes.

Posted by: LiberryAnn on 2010-02-17, 21:17:48

A LLC and a corporation are there to protect you from losing your personal property through your business ventures. This would argue against a bank giving you money in an unsecured loan situation. I have been told that you need to be in business for 2 years to get a Small Business Administration loan guarantee, but that was several years ago, and may not be correct. The source below will give you a link. If you are going to sell stock in your company, you may want to start with friends and relatives. If you start with the general public you can end up with regulatory issues you do not want to deal with. If your company is in someway compelling like a bio-tech company or an internet company that does something no body ever thought of before (Facebook, Twitter) it may be possible to get an angel investor although much harder now than in the past. You will have to give them much of the company.

Posted by: Dan D on 2010-02-17, 21:39:46

There are very few unsecured loans left in this economy. You options would be incorporating & selling stock, finding a partner (not recommended) or looking for an investor, probably a professional. They will want a business plan, cash flow projections & a piece of he ownership. You have to be very buttoned-up for these guys.In the old days, I could help you do a 100% loan without collateral, but not in this economy. I can still help you but you must be willing to do a lot of hard work. DD

Posted by: Eric H on 2010-02-17, 21:44:51

If you're a small business, you need collareral unless you have had an excellent relationship with your bank for a very long time.