Preparing for Business Loans for Unemployed
Business loans are usually afforded only to those who are actively employed. However, in recent times and more as a result of the economic recession that the world suffered last year, some economic stimulus packages include offering loans to those who are unemployed. So if you are unemployed learn how to apply for a small business loan:
Look for a bank, lending or financial company that offers business loans for the unemployed. Not all banks may offer this service, so be sure to do a thorough scan of the financial institutions in the area.
Because the person planning to owe the money is unemployed, financial institutions need a certain guarantee that the loaned amount will be paid by the borrower. Here, collaterals are required. Some of the most common ones are house ownership certificates, land ownership certificates, cars, household appliances, and jewelry.
In some areas, financial institutions do not require collaterals. Instead, they seek to become an active partner on the planned business to which the business loan is intended for. This setup usually takes the shape of participation in the planning stage as well as having a representative to monitor firsthand the progress of the business.
Another requirement some financial institutions require is to have a feasibility study first. While this mean spending even before the actual business begins to operate, financial institutions do this to make sure that the planned business has a good chance to survive. This is why some business loans include the planned expense for the study.
Sources of Business Loans
While financial institutions are the common source of business loans, some local governments offer this type of loan to their residents. However, the type of business is usually decided by the type of social service that the government wants its people to enjoy. For example, in areas where tourism is booming, business loans are prioritized to those who want to start business in the hotel, restaurants and tourism areas.
Regardless of the source of the business loan, it is common for the source of the funds to desire to be regularly updated on the performance of the loan. Compared to other types of loans, let’s say salary loan, the business loan or business financing especially for the unemployed requires regular submission of reports. This is to help the lending institution monitor the performance of the loan and give advice to the borrower if needed.