Most business owners have experienced a situation where you need extra capital to keep operations running. You may need new equipment, hire staff or invest in marketing. But especially for business owners of small or newly created businesses, it can be difficult to get a loan from the bank. Especially if you can't provide collateral for the loan.
At Qred, we focus on small Danish companies. They are the backbone of the Danish business community and they want to help them grow. At Qred you can borrow money without security requirements. However, we require you to be personally liable for the loan as a self-debtor guarantor.
A business loan or business credit does not really require any kind of collateral or mortgage. However, it is something that almost all lenders require to issue a credit, especially when it comes to small and medium-sized businesses. There are a number of different types of warranties, but in this post we will only review personal warranties. So you can understand what unsecured business loans mean in simple terms.
Personal guarantee for business loans
When you provide a personal guarantee for a loan with a good interest rate, it means that you vouch for the company. You simply undertake to pay if the company is unable to repay the business loan. This is called personal liability and means that the creditor, i.e. the lender, can be sure to get his money back even if the company goes bankrupt. In other words, unsecured business loans are quite rare.
Requirements for guarantors for business loans
Common requirements for guarantors are:
- That the person must be a Swedish citizen
- Have an organized economy
- Free from payment annotations
- No debt balance
The lender controls the person listed as a personal guarantor, and although some tolerate payment remarks, few accept a personal guarantor with a debt balance. It is therefore important that both you as a personal guarantor and any person acting as guarantor for your business are aware of your financial situation. Both personal and corporate finances.
The advantage of a personal warranty
A great advantage of using a personal guarantee for a business loan is that you can get better conditions, either in connection with the loan amount, cost or maturity. If you apply for a larger business loan or want to get even better terms, you can get more people to bail in person. It spreads the risk to the lender.
The disadvantage of a personal bail
It is simply about you as a private individual guaranteeing the loan and the company's ability to pay. Your personal finances can be negatively affected if the company has difficulty repaying loans, invoices and debts. Therefore, think about whether there is anything you can do and whether you should enter into an agreement with any partners or partners.
Collateral is the most common form of guarantee.
When it comes to business loans, the property guarantee is the most common form of guarantee. This type is the only one where it is allowed to have several guarantors as collateral. What may seem harsh is that the lender can choose to charge anyone for the debt. In other words, they do not have to take into account any considerations other than moral considerations for the financial situation of the various people.
A simple guarantee is the most common guarantee for small business loans.
If you and your business take out a small business loan, some lenders will accept a simple guarantee as collateral. The process for a simple guarantee is for the lender to submit the debt to Kronofogden so they can examine the company's ability to repay the loan. If Kronofogden does not believe that the company can repay the debt in the form of money, property or anything else, the lender may require the guarantor to pay part or all of the debt.
It is therefore very unusual to get a business loan without a guarantee. Some form of security is often required by banks and lenders. Contact us if you are in doubt about what it means for your business in connection with a business loan.
Why is it necessary to booklet in person?
Whoever lends money will be sure that the person who borrowed the money will actually pay the loan back. If the company cannot provide security, it is almost always required that the owner is personally liable for the debt.
Does Qred require personal liability?
At Qred , we do not require collateral for our borrowers. But we always require that you are personally liable for the loan as a guarantor. For us, the entrepreneur behind the company is at least as important as the company, and a skilled entrepreneur is our best guarantee of getting your money back.
