To successfully borrow money from people you know, it is important that you overcome

1. Financial Risk: You must demonstrate to people who might be potential lenders that your business has a reasonable chance of success, and that their investment in it is a smart one. Lenders will want to see that you have the necessary skills, have thought about the risks involved and have a plan in place to minimize these risks while growing your business.

2. Emotional Risk: You must convince people who might be potential lenders that investing in your business will not jeopardize their relationship with you. When it comes to borrowing money from people you know, we realize that small business owners will be at different points in the process–some of you may be uncertain as to where or how to begin, while others may already have specific lenders in mind.

Businesses in existence for less than two

Years typically find it difficult to get loans

From commercial lenders because the

Businesses are viewed as a high credit risk.

Debt vs. Equity Financing

Although this guide focuses on how to borrow money from people you know, it is still important to understand the types of financing that are available to small business owners. This way, you can determine which type, or combination of types, makes sense for your situation. After all, it is not uncommon for small business owners to receive financing from several sources, one of which is usually friends, family, and other private parties.

Debt Financing is money that you will pay back, usually with interest, over a set time period and in accordance with pecific terms. Some traditional sources for debt financing are banks and credit cards. There are also numerous programs offered by federal, state, and local governments that hope to encourage the growth of small businesses because of the positive effects they have on the economy. Another source for debt financing is borrowing from people you know, such as family, friends, and business associates. Many of today's successful companies, including Motown Records and Crate & Barrel,

started out this way.

 

Equity Financing involves giving up a portion of the ownership of your business in exchange for money received from equity investors. Because equity investors are buying a piece of your business and essentially becoming joint owners, if the business fails you generally are not obligated to pay the money back. On the other hand, if the business succeeds, equity investors share in the financial success well beyond recouping the money they originally invested into the business.

Common sources of equity funding:

• Venture Capitalists: professional investors who are looking for a higher rate of return by investing in

high-growth business ventures

• Angel Investors: high net worth individuals who invest in businesses on a private basis

Debt Financing

Pros:

- Typically easier to get than equity financing

- Wide range of options available (e.g., bank loans, lines

of credit, family and friend loans, etc.)

-          Allows you to retain control of your business

-           

Cons:

- Collateral is sometimes required

- Amount you can borrow is usually limited

- If business fails, you still may have to pay back

the money

Equity Financing:

Pros:

- Investors can provide expertise and key contacts

- Usually available in larger amounts than debt financing

- If business fails, you usually don't have to pay back

the money

Cons:

- Investors may demand a say in running your business

- Requires additional time to manage investor expectations

- You forfeit sole ownership of the business and its profits

Debt vs. Equity Financing: Pros & Cons

Common Concerns of Small Business Borrowers

Section 2

While family and friends can be an excellent potential source of financing for your business, as a borrower you may still have some concerns about mixing money with people you know. You are not alone. Below we have listed the top concerns of small business borrowers that we have identified based on our experience.  Underneath each concern we have provided a rationale that should help ease your worry.

1)     Borrower concern: "I am worried lenders will meddle in how I run my business."

How to minimize this concern: By formalizing the loan through proper documentation you will make it clear that this is indeed a loan, and not a favor, which means your lender's role does not extend beyond just that–a lender.

2)     Borrower concern: "I'm concerned that my lender will scrutinize everything I do financially that isn't related to the business. For example, if I take a vacation will they wonder if I'm doing it with their money?"

How to minimize this concern: By setting up a mutally agreed upon repayment plan, your lender will know that you are serious about paying back the loan. Because they will be receiving steady payments, any concerns they might have about how you are spending money should be alleviated.

3)     Borrower concern: "Won’t my lender worry about my business failing?"

How to minimize this concern: Yes, that is a risk they’re made aware of. However, if you secure your loan with collateral, your lender's risk is significantly reduced. In the event that you default on the loan, your lender will be entitled to receive something (e.g., a vehicle, office equipment, etc.) in lieu of being repaid.

4)     Borrower concern: "Even after I pay my lender back, are they going to feel as though they did me a favor, and that I still owe them something?"

How to minimize this concern: By talking to your lender up front and formalizing the loan process, you make it clear that this is a business opportunity, not a favor. By making sure they know that all you owe them is the amount of money borrowed plus interest, you will prevent them from holding the loan over your head in the future.

5)     Borrower concern: "What if I have trouble paying back the loan?

How to minimize this concern: Generally, when you borrow from friends and family, you have more flexibility (compared with a commercial lender) in how you pay back the loan. If you are having difficulty making payments, be upfront with your lender about your situation, then suggest an alternative repayment plan that works for both of you. In most cases, your lender will appreciate your proactive response and accommodate your request.

Many times, family-and-friend loans are often

modified to be more affordable midway

through the repayment term.

Did you know?

 Thinking like a Lender

Section 3

Before you approach someone you know for money, you should first understand the typical loan approval thought process of a traditional lender, such as a bank. This is important for two reasons:

1. The person you approach for money may follow a similar thought process, and you will need to provide the necessary information just like you would to a traditional lender.

2. Even if the person you approach doesn't follow this thought process, by providing  some or all of this information you are demonstrating your business knowledge and professionalism, both of which can increase your chances of obtaining the money you need.

The typical loan approval

thought process:

1. Management Experience &

Expertise. Lenders need to feel comfortable that a borrower has the necessary background and skill set to effectively operate the small business.

2. Detailed Business Plan.

Lenders usually require start-up businesses to have a business plan that includes income and expense projections for the first three years of operation.

3. Cash Injection.

Lenders want to know how much money the borrower has at risk. For start-up businesses, commercial lenders typically require at least a third of the total project costs to be covered by the borrower.

4. Collateral. To reduce their risk in case of default, lenders often require the borrower to secure the loan with collateral. This is usually hard goods such as office equipment, vehicles, etc., but sometimes it can be against accounts receivables depending on the business' current cash flow.

5. Personal Character. In addition to your experience, lenders also try to understand who you are as a person.

As a result, some lenders will conduct background checks that can include looking for any previous litigation or bankruptcy information.

6. Credit History. Lenders like to see a good credit history. If there are any credit issues, an explanation will be

required. Different lenders have different levels of tolerance when it comes to credit issues.

7. Personal Financial Statements. Lenders like to see a list of personal assets and personal liabilities. Do not include debt paid by your business. Include other sources of personal income.

Investments by family and friends account

for more than 50 percent of all investment

dollars for start-ups.

Did you know

Determining Who to Approach for Money

At first, trying to determine who to approach for financing may seem like a challenge.

Many small business borrowers feel they don't know enough people who are in a position to lend them money, and who they are comfortable approaching.

To formulate a list of potential lenders, consider these helpful steps:

• Write down the names of everyone you know, regardless of how remote the relationship. This might include family, friends, colleagues, mentors, teachers, neighbors, etc.

• Circle the names of the people who have some insight into your character and/or personal and business skills.

• Think about a realistic amount of money each person might be able to lend you, and write down that amount next to their name.

Ahmet Ertgun, founder of Atlantic 

Records, borrowed money from his

family dentist.

Consider borrowing from several people rather than trying to get it all from one person. This way, you can ask for

an amount from each person based on what they can afford to give you, and not on what you need.

IMPORTANT BORROWING TIP FACT

Target Lender Target Lender Amount Amount

Description Name Requested Obtained

Elements of a Strong Loan Proposal

When approaching someone you know for money, it is important that you develop a strong loan proposal that backs up your request with facts and figures. Merely asking for the money is practically a guarantee that you will be turned down.

Consider the following:

1. Financing Overview. Show potential lenders exactly how much money your business will require, and tell them what othersources (if any) you are using to obtain financing.Use Worksheet B to determine the start-upand ongoing costs that your business will incur.

2. Legally-Binding Loan Agreement.

Let potential lenders review an actual loan agreement. Seeing an agreement in writing will show your commitment and make potential lenders feel comfortable about giving you the money. Use one of the Sample Promissory Notes to show them

an example.

3. Collateral List. By identifying items you are willing to use as collateral to secure the loan you are demonstrating that your lender's investment is protected. If you will be securing your loan with collateral, use Worksheet C to develop your own collateral list and review it with your potential lender.

4. Loan Type Options. From start-up business loans to seasonal loans, the type of loan you propose impacts how you will repay it. Review the Loan Type Options chart to determine which loan works best for your business situation.

5. Payment Schedule. Based on which loan type you select, review a sample payment schedule to show potential lenders how the loan would be repaid. Use the Sample Payment Schedule.

 

6. Outsourced Loan Servicing. Consider using a loan servicing company to manage the repayment process, which includes payment processing and record keeping. This will reassure your lender that they won’t have to deal with awkward conversations that might inhibit your relationship.

Default rates on informal loans drop from 14 percent to less than 5 percent when a repayment installment plan is used in lieu of a lump sum payment.

Did you know?

Overcoming Common Lender Objections

Potential lenders may object to giving you money for a variety of reasons. Sometimes they may tell you why, other times they may not. Either way, it is important for you to understand these objections so you can respond to them appropriately.

Below are four categories of lender objections, as well as suggestions for how to overcome them:

1)    Financing Objections: These objections typically focus on the lender's financial situation.

Lender objection: "I don't have the money to give you."

Suggestion to overcome objection: Consider asking for a lower amount. Try to find out how much money your lender can afford to give you.

Lender objection: "I can't access the money. It's tied up in an investment, retirement plan, etc."

Suggestion to overcome objection: Encourage your lender to contact their [financial advisor, accountant, etc.]to find out if they can move the money without being penalized. For example, some retirement accounts and annuity plans allow money to be lent to a small business without paying a penalty or taxes.

2)    Business Risk Objections: These objections typically focus on the lender's perception of your business.

Lender objection: "I don't believe your business will succeed."

Suggestion to overcome objection: Review your business plan with your lender to show them why you believe the business will succeed. Consider asking your lender for suggestions on what improvements you could make so they feel more comfortable about your business.

Lender objection: "I don't think you have the skills to run your business."

Suggestion to overcome objection: Emphasize your experience. Talk to your lender about former jobs you've held that relate to your small business, entrepreneurial classes you have taken, or people you plan on hiring.

3)    Relationship Risk Objections: These objections typically focus on the lender's perception of how lending you money will impact their relationship with you.

Lender objection: "I'm concerned that our relationship will suffer if there's a problem paying back the loan."

Suggestion to overcome objection: Recommend using a loan administration company to manage the repayment process. This way, there's a buffer between you and the person from whom you borrow.

Lender objection: "What if we disagree over the terms of the loan after the fact?"

Suggestion to overcome objection: Emphasize that everything will be documented in writing, and that detailed records will be kept–all of which can be handled by a neutral third party.

4)    Outside Pressure Objections: These objections typically focus on external factors that affect the lender.

Lender objection: "My [significant other] won't like the idea of my lending you the money."

Suggestion to overcome objection: Offer to review your loan proposal with your lender's significant other. Also, consider recommending the use of a neutral third party to handle the process.

Lender objection: "I have a friend who lent someone money and never got paid back a dime."

Suggestion to overcome objection: Emphasize that if the loan is set up and managed correctly, the chance of successful repayment is much higher. Additionally, you should stress why you are a good borrower. You might even offer to share your credit history to prove it.

An SBA-sponsored study found that solo entrepreneurs expected their start-up costs to average $6,000.

Did you know?

Summary

The key to approaching friends, family, and other people you know for money is to be open and honest. Focus on the people you believe not only have the resources, but are also likely to have insight into your character and will be interested in your business.

Ask only for an amount that your potential lender will be comfortable giving, and make it clear that a refusal won't offend you or hurt the relationship. Agree to terms formally in writing, and detail how you will repay the loan. Consider using an outside loan servicing company to manage the payment process and maintain accurate records.

Above all, be as business-like as possible.

 

When someone lends money to a small business owner, they are investing in an opportunity.

Getting Business loan with No Money Down

    A) When it comes to getting a loan for a business, many lenders if not all, would like to see a detailed business plan before they even think about approving your loan application if you are applying with no money down. The best way to do it is to get a professional business plan writer to put down a detailed plan showing the goals of the business, how you plan to make profit in the business and how long it will take before you can begin making repayments.

    B) An excellent credit score is required in order to obtain a business loan with no money down. One of the factors lenders use to determine whether you can pay back the business loan you are taking is your credit rating. If it is good, it simply conveys to the bank that your money management skills are good and that you would treat money that comes into the business with the same attitude you show towards your personal money.

So if you have not done so already, get your credit report and score. Do what you need to do raise your credit score, if it is bad. Pay your creditors, pay off your debts and pay your bills on time to raise your credit score with six to twelve months.

    C) With a no money down business loan, some lenders would ask you to provide an asset as a collateral. This is simply to give them some assurance that you can pay back their money. And that if you default, they would not lose their money. These could be a car title or other items like jewelry, if you do not have a house to use as collateral. With a collateral the bank will consider your application for a no-money-down business loan.

    D) If your credit score is not good, having a co-signer with a good credit score will increase your chances of getting a business loan with no-money-down approved. The bank will use the excellent credit rating of the co-signer and give you the loan.

    E) The fact that you are making no down payment for the business loan does not mean that you should get your loan at a exorbitant interest-rates. So do comparison shopping using loan comparison websites. Compare interest rates of various lenders you intend to borrow money from. Requesting a no-obligation quote from lenders would be the best way of doing a simple comparison to get the best rates.

What is fast loans online?

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An unsecured bank loan

An unsecured bank loan can be of great help to someone with good credit who needs cash for various reasons. These lending agreements can be offered to both individuals or to businesses, usually small businesses. But an unsecured bank loan can also become one of the most difficult lending agreements to secure for two reasons. First, the lending agreement is an unsecured type of borrowing instrument which means that there is no collateral being offered in case of default. This leaves the lender in a very precarious position with no leverage and one of the last in line to ever receive payback in the event of the debtor declaring bankruptcy. Second, the lending agreement is be offered by a banking institution, the most conservative of all the loaning entities when it comes to offering lines of credit.

Of all the places to get an unsecured lending agreement, a banking institution offers the lowest priced money a person can ever borrow. There are two main reasons for this truism. First the banking institution, unless privately owned, must answer to stockholders for quarterly profits earnings. Except in the case of a few banks who have been guilty of malfeasance when it comes to issuing risky mortgages for promises of high returns, most stockholders want to know their investment is dealing with low risk borrowers and are willing to take lower returns on their investments rather than take a chance on a high number of defaulted notes. Secondly, a banking institution is responsible for the well being of its depositors' monies. Unlike a lending company who has investors willing to take high risks for high profits, a banking institution realizes an obligation to its customers for the relative safety of their deposits.

So an unsecured bank loan, a relatively high risk transaction, is only offered to creditors with sterling borrowing histories and low debt to income ratios. For the borrowers with those characteristics, the unsecured bank loan decision can be rather sweet. For instance, credit rates for banks who offer these lending agreements can be as low as nine percent. Of course, the interest rates for this kind of lending agreement are variable in nature and not fixed. That means that the payments could possibly go up as economic times often fluctuate. They are sweet because lending companies which open their arms to those with marred credit histories charge as much as twenty eight to thirty percent APR for an unsecured bank loan.

But getting an unsecured bank loan must also come as the result of passing a debt to income ratio scrutinizing process. Having a stellar borrowing history is not enough for the potential borrower. In addition, the borrower must not have too much debt in relation to his income. Even if the borrower has made all debt payments on time, the fact that more than thirty five to forty percent of income is dedicated to debt repayment will be enough to sink the bid to obtain an unsecure bank loan. The Bible declares that financial success in life is not the ultimate achievement for Christians. "For we know that if our earthly house of this tabernacle were dissolved we have a building of God, an house not made with hands, eternal in the heavens." (II Corinthians 5:1)

When a small business seeks an unsecured bank loan, it can be for a number of reasons. For example working lines of credit for the cash needs of small businesses is an unsecured lending need. A banking institution can issue a credit card which is a high interest line of credit. Banks can also issue short commercial loans for one to three years. In all of these cases, the bank is relying on the integrity and signature of the borrower to repay the lending agreement. But to have any of these lending agreements become a reality it is important for the borrower to have done his homework and know his credit score and debt to income ratio before heading to the bank and talking to a loan officer. If a person has no collateral to offer because of high indebtedness, it might be a sign that the borrower should drop the idea of another loan on top of all the others.

But if a person is resolute in securing a lending agreement , there are alternatives to an unsecured bank loan. For example, loan companies are willing to overlook a fair amount of late payments and forty percent or more of debt to income. These lending companies are best found online or even at a local strip mall and often have nationally known names that have been in business for many years. The interest rates will be much higher than a no collateral bank lending agreement would ever be. There may also be some points involved in the agreement. A point represents one percent of the total amount of the lending agreement and if the borrower cannot pay these costs upfront, they are often rolled into the total amount of the loan.

Having made good money decisions earlier in life is key to getting a no collateral lending agreement with a banking institution. Banks are eager to loan money to those who have proven to handle credit in a responsible manner. The beginning of anyone proving credit worthiness is paying off a credit card every month and not carrying a balance, or perhaps making timely payments of a car loan. Making right choices early can save thousands and perhaps tens of thousands of dollars of interest over a lifetime. Just a one percent difference in a good mortgage rate is a huge payoff for earlier fiscal restraint.

Approved Unsecured Personal Loans For Bad Credit: How They Improve Your Finances

Bad credit borrowers are considered high risk by traditional lenders. But while this may not always be a fair evaluation, the result is a need to look elsewhere to secure loan approval. The availability of unsecured personal loans for bad credit borrowers means there is a way to access additional funds, both quickly and assuredly.

Getting a low score is quite easy, with late payments and loan defaults contributing to a drop in credit reliability, which leads to a reduction in financial opportunities. But there are practically guaranteed loan approval opportunities when the right lender, and right loan package, is sought. A payday loan from an online lender, for example, is one of the most likely to be granted.

But what are the specifics that everyone should be wary of before seeking an unsecured personal loan? Here are some factors that need to be considered.

Fast Cash With Minimal Hassle

Getting an unsecured personal loan for bad credit is arguably the easiest task, but not because the lenders are simply feeling generous. The fact is that, as loans that are granted on the back of upcoming paychecks, payday loans are set to be approved quickly is the income figure is large enough.

There is also a no credit check approval process, which means that lenders can boast a practically guaranteed loan approval system. It also means there is no time wasted searching through the credit history of applicants. So, approval can be granted in a matter of minutes, and funds deposited into the borrower accounts in a couple of hours.

Still, there are criteria to meet before approval can be given. Not least among them is the need for a large enough income, and a low enough typical outgoings. Otherwise the challenge of repaying these unsecured personal loans can lead to serious consequences.

Key Factors When Applying

Because approval for these loans rest mainly on the size of the income the borrower has, applying for an unsecured personal loan for bad credit is seen as very easy. But this is not actually true. It is essential that key factors are understood before submitting an application.

For example, despite the limited loan sum permitted, a sum of $2,500 repaid in just 30 days can be debilitating. Basically, other essential monthly obligations may not be met because the funds are not there. So, the effect can be damaging. What is more, the semi-guaranteed loan approval system means that interest rates are high.

When applying, it is typically necessary to present a post-dated check for the borrowed sum plus interest, to the lender to ensure payment is received. This check needs to include fees too. If the unsecured personal loan is application for over the Internet, then an electronic check can be submitted with an ABA bank routing number.

Payday Loans - The Loan of Choice

It is understandable that bad credit borrowers would flock to payday loan providers when the terms include a no credit check approval process and a near-guaranteed loan approval. However, its popularity is down to more than just the excellent chance of getting approved. It is also the immediate nature of accessing the funds.

While approval is quite straightforward, it is also necessary to be over 18 and have a reliable source of income. To this extent, lenders usually demand the bank account number of the applicant. This makes it possible to both receive cash and extract repayment without delay, removing the risk of default to greatly help in getting an unsecured personal loan for bad credit.

The result is an unsecured personal loan that is high accessible and impossible to fail to pay (albeit a very costly repayment), which is a good way to start back on a the road to improving your finances.

Securing a $25,000 Unsecured Loan With Bad Credit Is Easier Than You Think...

Finances can turn sour very quickly, with loan deals containing penalty fines that are applied with a payment is late or missed. This means that the following month, the sum due can be as much as 225% of normal amount. But to stop that rot, it is possible to get a $25,000 unsecured loans, with bad credit not the hurdle many think.

The idea of getting an approval with poor credit scores on such a large sum might seem strange, but if a bad credit borrower compiles and submits a strong application there is every chance of securing that approval. Of course, the terms will not be ideal, but receiving such a cash injection will make the compromise worthwhile.

Still, getting a large unsecured loan approved is the point, and in order to do this there are some issues that need to be considered carefully.

The Crucial Factors

There is no doubt that securing approval for a $25,000 unsecured loan with bad credit is not going to be a simple matter of filling out the application form well. There is usually some preparatory work to be done. Ultimately, approval comes down to two crucial areas: employment status; and the debt-to-income ratio.

Employment is the key area of every loan application; after all, borrowers need to have the means to meet repays. It is perhaps even more significant when seeking approval with poor credit scores, with full-time work and sufficient income required. Also, the job must have been held for a minimum of 6 months before the approval.

Having a strong debt-to-income ratio is perhaps even more important, since it is this that dictates what repayment sum is affordable. The ratio is calculated by taking the total monthly expenditure from the monthly income, but the 40:60 ratio means that just 40% of the excess income can be committed to the new repayments. With large unsecured loans, the repayments can be too high.

Improving Your Credit Score

One way around the problem of affordability is to improve the credit rating, thus lowering the interest rate charged. And since clearing some (if not all) existing debts is the only way to accomplish this, the overall debt-to-income ratio is improved in the process, along with the likelihood of getting the $25,000 unsecured loans with bad credit.

The most effective way to clear existing debts is to take out a series of small personal loans, and repay them very quickly. A long-term loan of just $1,000 can be used to repay a credit card debt. With that debt gone, the credit score increases, and with repayments on the new loan kept low, extra cash is freed up.

The result is to see the ratio lowered, so the chances of securing approval with poor credit scores is much better. Still, this option requires some time to make the necessary impact, with perhaps 3 or 4 such loans secured in succession. Gradually, a large unsecured loan becomes attainable.

Find a Cosigner

But a far quicker and more effective way to strengthen an application is to find a cosigner to guarantee the repayments. Lenders are more willing to grant a $25,000 unsecured loan with bad credit when they know they will get their money back, and make their profit. So, a guarantee of repayments is exactly what they want.

The great advantage of finding a cosigner is that, with the risk associated with the loan now lifted, the interest charged is lower, making the whole deal more affordable. The key fact is that no reason remains not to grant approval, with poor credit scores confirmed as being no great influence.

Still, a cosigner must be accepted by the lender first. For this to happen, they must have an excellent credit record and a large enough income to meet the repayments on a large unsecured loan too.

How Is a Secured Loan Different From an Unsecured Loan?

When the need to borrow money arises, there are several choices to obtain the cash needed, including borrowing from family members, a cash advance on a credit card or a traditional loan from a bank or credit institution. Banks offer both secured and unsecured loans. It is important that borrowers understand the differences between secured loans and unsecured loans before signing any loan documentation. There are pros and cons to both types of loans.

Collateral

The main difference between a secured and unsecured loan is the collateralizing of the loan. With a secured loan, the bank will take possession of the title of the assets that are being used as collateral for the loan. This may include a home, car, investments or other assets that can be converted to cash. With an unsecured loan, there is no collateral provided for the loan. The bank does not gain access to any assets with an unsecured loan, which is generally lent on the strength of the borrower's good name and credit history.

Interest Rate

Because the bank is more at risk with an unsecured loan, the interest rates tend to be higher than with a secured loan. In some cases, the interest rates on an unsecured loan may be higher than that of your credit card. A typical unsecured loan will have a fixed interest rate. It is possible to have an unsecured line of credit, similar to a credit card, which will have a variable interest rate. Regardless, an unsecured loan’s interest rate will be higher than a secured loan where the bank has collateral to repossess if the borrower does not repay the loan.

Term

The term of an unsecured loan tends to be shorter than a secured loan. Again, this is to lessen the risk to the financial institution. Without collateral to mitigate the bank’s risk, the institution wants the money to be repaid as soon as possible. This same reasoning is also why unsecured loans are usually available in much lesser amounts than secured loans. Secured loans, particularly those secured with real estate, can have terms as long as 30 years.

Availability

Not everyone will qualify for an unsecured loan. Many banks will require an excellent credit score as well as an established relationship with the borrower before extending an unsecured loan. In fact, some banks refuse to lend money without collateral and will not even offer overdraft protection for a checking account unless it is tied to a savings account. With a secured loan, those with good credit will qualify and an existing relationship with that financial institution is usually not 
required.

Tax Implications

With a secured loan, it is possible to write-off the interest associated with the loan. This would hold true if the loan is secured with your primary home as collateral. However, you must also realize that you are putting your home at risk if you are unable to make the payments on the loan. With an unsecured loan, writing off the interest associated with the loan is not possible as it is not collateralized. However, you are also not risking your assets if you are unable to repay the loan.