Small businesses that are financially healthy, but need an influx of money to grow their business in order to increase their revenue often need to seek a loan to buy a new property, buy new equipment, or hire more employees. However, despite their healthy financial situation they simply lack the necessary criteria to get a traditional bank loan. In such a case you may be able to get an unsecured loan based on future income also known as a Revenue Advance.
What is A Income Based Unsecured Loan or Revenue Advance
An income based unsecured loan is a business loan based on your business’s current and future income. Lenders give you a cash advance to grow your business and you repay the loan based on a percentage of your sales rather than having a set repayment amount. Here are some features regarding a Revenue advance:
· The amount of the loan is based on the prediction of your future sales or revenues
· Your monthly payment amount varies based on your sales. Which means that months you sell less your payments will be less, and months that sales are high you payments will be higher.
· Loans available with bad credit
· The percentage of the payback is often negotiable
· You can often get approved and have the money from the lender within a month for banks and sometimes within hours or days from alternative lending institutions.
· You know what your total payment amount will be right up front when apply and get the loan.
· Since the loan is unsecured none of your assets are at risk.
· Sometimes it takes longer to pay back the loan that expected.
· Revenue advances may have higher interest rates than traditional loans.
What You Need to Do Get a Future Income Based Unsecured Loan
In order to secure a future income based unsecured loan you will need to produce the following to the lending institution.
· You will need to provide 3 months or more of business bank statements to show how your business is doing.
· You will need to prove you have steady revenue and that your revenue is likely to increase in the near future.
· You Credit score
· A plan to show how the loan will be used to increase your existing revenue.
The Best Place to Get A Future Income Based Unsecured Loan
Both banks and credit unions can give you an revenue advance loan. However, if you need the money quickly these may not be the best choice since these traditional institutions can take a month or more to actually make the money you are seeking at your disposal. If you need quick money to take advantage of equipment that are on sale then the money may come through to late to take advantage of the discounted price.
Alternate lending institutions can often process your paperwork and provide you with the money from the loan within a few hours or a couple of days. Which can be a good deal if you need the money in a hurry.
Make sure you do your research and decide which lender may be best for you.
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