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Any kind of financing can be confusing and overwhelming, especially when it is a new skill for you.  There are many terms and definitions and types of financing out there.  The sheer volume of information can be very intimidating and discouraging so let us take a look at some basic financing information.


First, let us look at the difference between secured business loans and unsecured business loans.  Basically, a secured loan involves some sort of collateral – in other words, you have to have some kind of asset to borrow against.  For example, to be approved for a secured loan, you might have to put your house up against the loan and, that means that you could lose your house if you default on your loan – the lending institution could take your house and auction it off to pay whatever is left on your loan if you fail to pay it off.  Collateral can also be some other asset such as your car or recreational equipment.  Basically, anything of high value can be used as collateral for a secured loan, not just your house.  You do not need to worry about that with an unsecured business loan although your interest rate might be higher because of that fact.  Of course, there is always the possibility that you cannot borrow as much money with an unsecured business loan as you might with a secured loan but, an online finance company such as Cash Flow Finance can help you sort that out too.


That brings us to another basic financing term:  interest rate.  Any loan will have an interest rate attached.  Basically, interest rates on business loans, or any other type of loan for that matter, are calculated as a certain percentage of your loan amount so, if you receive a loan for $5000.00 with an interest rate of 5%,  you will pay off a total of about $5263.00 instead of just the $5000.00 you borrow.  The $5000.00 is referred to in financing circles as your principle while the other $263.00 is the interest you end up paying.  The interest pays for the service of your loan and provides a profit for your lending institution and, of course, your interest rate will depend on a number of factors including the institution you use and your credit rating.  Oftentimes, a financial institution will offer a lower interest rate on a loan that is paid off more quickly and other negotiations are possible as well.


With the advent of online finance companies, a lot of the confusion has been taken out of the financing game.  When you apply for a business loan online, you are presented with a variety of choices from a variety of trusted and established lending establishments and, online finance companies often have live chat and support to help answer any questions you might have as you go through the application process.  An online finance company such as Cash Flow Finance can help you understand the implications of various interest rates and types of loans available to you and answer any of your questions all in one convenient location.

Published: about 1 month ago by yiyuan.

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