Unsecured loans are loans that lenders are willing to make without having to have collateral to back up the loan from the borrower. In other words, the loan is made solely based on the creditworthiness of the borrower.
This is a situation where it is also based upon a more intimate business relationship of trustworthiness than the normal bank-lender situation. This type of loan is also called a personal loan or a signature loan.
If you are unsure as to the different sort of loans available, check out the following article – ‘What is the difference between unsecured and secured loans?’
Are You Eligible for an Unsecured Loan?
Generally, a person must have a very good credit rating in order to secure this type of loan. Usually, the loan is 
for a certain period of time such as a 30, 60 or 90 day period, and then the loan comes due. Most often, the loan can be renewed, but it is always at the discretion of the lender.
The loan can be paid off, or paid down at any time during the period of the loan. Many professionals and business people take advantage of such a loan situation to provide extra working capital and funding for various business projects. For example, a merchant might use such a source of short-term money for the purchase of extra inventory, or to purchase merchandise that is on sale, that otherwise would not be obtainable.
What can Loans Be Used For?
A professional might use the extra money for investments or for the funding for office equipment, or just for an emergency fund.
Unsecured loans might also be used for bridge financing for a new vehicle or for a mortgage while more permanent financing is being arranged.
The purpose for such financing might also be to establish a banking relationship where the borrower knows that he or she has a place where they can go for credit if they need more of it. It is all about the banking relationship as much as it is about the money.
For more information about how loans work, please take a moment to check out the following video:
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