No credit, unsecured personal loan

Why would any traditional lender do a loan of this sort? Except maybe a loan shark, with your legs the guarantee?

As long as you choose to maintain no visible credit record, they have no track record to use to gage the risk of lending to you.

Any lender wants to know that they will be paid back. The interest alone is (usually) inadequate to compensate for the loss of the principal.

They want to know whether you are able to pay it back. This could be based on a security interest, a documentable income stream, with some history to indicate it is likely to continue, or possibly a known future cash stream.

They want to know whether you are willing and likely to pay it back. Do you pay your bills? Do you have a history of paying off similar bills? They have had promises from other borrowers before, and not got their money back.

And they want to know how they will be paid if things go wrong.

What you want presents them with nothing but a promise, and nothing to indicate how good that promise is. That is not lending. It might be venture capital, but those people would still want to know your track record and likelyhood of success, and they would own a big chunk of whatever you do.

Furthermore, for the amount you are looking for, it is not worth it for anyone to do anything but loans on the usual basis. Loans based on credit reports are cheap to do: just pull a report, run the score, check the income, and approve or deny based on a cut-off point, or grant terms based on a table. Loans based on evaluating special situations take time and care, from people with more skill and training. Lenders have to earn a living, too.

What you are looking for is a rich relative, who knows what your talents and your word is worth. A stranger can't know that, and a lender with fiduciary responsibilities to others can't bet on that.

 

"I don't have bad credit, and I actually present "Good" credit by my careful, safe, rare, original, above average, and impressive decisions and my ability to maintain 0 debts and 0 cost of living for however long I need it (Recommended by various sources for entrepreneurs\college kids to stay at home as long as they can to benefit their future\finances\credit\options\debt."

Although your "burn rate" may be a key parameter in whether you can get your business going far enough to turn profitable and self sustaining, your lack of visible credit credentials may hamper your ability to grow the business. It can also affect your ability to establish other business relationships necessary for running a successful business, such as banking relationships for handling the payments you receive from customers who may pay thru credit cards, open accounts with suppliers, accounts with customers, etc. An established business may have its own credit history, but when you are starting out, there is only your personal credit history to look at.

Lending in our society is based on credit histories maintained by the credit reporting agencies, and scores derived from them, and whatever your personal views on thrift, lending, debt, and risk, if you fail to work with this existing system, it may limit your access to capital on the best terms, and your ability to expand and grow your business.

A potential lender has no effective way to evaluate and compare your risk by past performance if you have no credit history, regardless of how careful and cautious you know you are. That cuts you off from the majority of lenders, leaving you with lenders and terms you may be better off not accepting.

The potential borrower with a credit history, even with some existing debt, is viewed as a lower risk than one with no history and no debt, even though from a personal balance sheet view, having no debt is better than having some debt. That is because the crucial but partly intangible factor of "willingness to pay" cannot be determined from financial statements alone. Most lenders do not consider loans that they had to sue on to collect as successes.

You can either position yourself to look like a responsible borrower by showing thru your credit history that you have been one in the past, or you can pay the price in limited access to credit, poorer terms, and lost business opportunity.

Having good credit is not a goal in itself, but instead another factor affecting your ability to succeed in business. The terms of your credit, thru your interest costs, go directly to your bottom line.

If you could finance your business growth yourself, none of this would matter. Clearly it does matter, or you wouldn't be looking for funding.

 

Speaking as a webmaster, I didn't need $ to "launch my career."

If you don't have enough for operating expenses for six months saved up (and NO debt), then it's time to work some more until you do.

 

"Bad credit? No credit? No problem!"
"Bad credit approved and accepted!"
"Have damaged credit? Apply here"

These are generally secured loans. Buy a car, or a house, and the lender has a lien, and tacks on fees and high interest. Unsecured implies something to show reliability, such as a credit history. If you don't have that, a lender wants security, something he can record a lien against, and sell if you default to recover his loss. That is what makes bad credit no problem.

Alternatively, you have the payday lenders, who keep you on a very short leash, with a direct debit of their payment the moment you get your paycheck, which they want coming from someone else, even with usurous rates.

Or you have the rent-to-own people, selling stuff to people with bad or no credit, at already inflated prices thru monthly fees, and banging on your door to take it back if you miss a payment. That is how they handle their risk.

Your financial statements alone don't guarantee the lender's position. Although your bank statements may back them up, he doesn't know how reliable they are, whether they are cooked, or simply erroneous. He also can't place a value in your business, since absent you, it may have no recoverable value. Nor can he count on your current low cost situation continuing. Stuff happens. A business with known customers and income, known expenses including market based rent, and known profitability may be more lendable since it is more likely to be sustainable.

 

Your alternative to using credit is to grow your business thru its own cash flow and profits, seeking those niches that don't require large advances of capital before they produce income, and obtaining some credit thru the terms extended by suppliers, or minimizing your capital needs thru limiting your own extension of credit to your customers.

Apple did this in its earliest phase, before they got venture capital funding. They sold a minivan to raise capital, got parts on terms from suppliers, sold "Apple I"s to customers and retail stores for cash, and operated out of a garage.

 

http://apple.computerhistory.org/stories/storyReader$16

If you already have a successful business, then it is your customers that know you best. Get your financing from one of them.

Or if you really believe people are beating down your door to throw money at you, ask Lesko.
http://en.wikipedia.org/wiki/Matthew_Lesko

 

This forum deals with people who have dug themselves into a debt hole and are trying to get out, are being harassed by creditors, or those whose credit has been screwed up, either by themselves, or thru the negligent acts of others, or who otherwise are trying to establish or re-establish access to credit on reasonable terms.

If you don't have existing credit, existing customer relationships, or lienable assets, why would you expect someone to loan you money? $28K with a 4 year payoff? Surely you're joking!

 

Why do you want to do it the hard way?

The easy way is to establish a few small credit acounts, show you can pay them on time, and build from there. If you do it right, in a couple years you can buy a house at low rates. If you screw it up, you have to live with the consequences.

You may think that obtaining consumer credit is irrelevant to your business interests, but it may be the easiest path to establishing the credit record that will then allow you to obtain credit for business purposes too. The purpose is not to run up a lot of consumer debt on useless junk, but by funnelling your normal expenditures thru credit cards for payment, while paying in full and maintaining no revolving balances, you will as a side effect also establish the credit history that will allow you access to credit for other purposes.

 

"People in America have got unsecured personal loans with NO CREDIT before, I'm sure a lot have."

Some of them have payday loans at outrageous rates, and are struggling to get free. You can find their postings on this site.


"What I need to know is where they got it from and where are some more places to obtain it."

You are assuming that they were somehow smart in getting money from those sources. Maybe they acted out of desperation instead. In general, those lenders that lend to lower risk borrowers lend money at the lowest cost. The cost of borrowing DOES matter, at least if you are still around and have to pay it.


"so I don't want to hear "No one will do that"...especially when programs exist for ONLY people with bad\no credit to get loans"

It does not matter that someone will do it, if the terms would make it a poor business decision for you to accept it.

There are plenty of lenders who will approve a mortgage loan, or even a car loan, with large upfront fees and high rates, to borrowers who they know cannot carry the loan. They can do it profitably, forclosing promptly (or repo-ing the car) and tacking on attorney fees if the borrower defaults. Some approve loans with the goal of profitting by stripping equity from borrowers who don't know what they are getting into.

"Programs" are just another name for advertizing targetted at a particular market sector. Although there may be government support for loans intended for people buying their first home (FHA, etc.), there is no free lunch, nor is there a Santa Claus or an Easter Bunny.

The legitimate lenders are looking for borrowers who will benefit from their loan, profit, and grow the business producing more lending in the future. The predatory ones may still do a loan, but with fees and rates that make it unprofitable to the business, and their security may be to quickly sue or force you to liquidate at the first sign of a problem. Which do you want: a partner or an adversary?

You wouldn't benefit from the distraction of dealing with predatory lenders collecting on excessively costly loans if your goal is to start and build a successful business.