How to Get Unsecured Small Business Loans
Unsecured small business loans are normally quick and painless. An unsecured loan is a loan that does not require assets as collateral, similar to a credit card.
The plethora of unsecured loan places has been significantly growing. This market is booming for one of two reasons, the first is the convenience.
Whenever you apply for a loan there is a waiting process, and depending on your credit, depends on how long this process will be.
The second reason is, even people with not so good credit can be approved for an unsecured loan, because they are normally done in house, instead of through a bank chain.
The following article will lead you through the process of obtaining unsecured small business loans, in a simple step by step process.
- Difficulty:
- Moderately Easy
Instructions
-
-
1
Know your market - Before you begin applying for any loans you need to know what you are looking for. Ask lenders located around you what they believe would be the easiest way for you to get a loan that is unsecured. Visit a nearby bank to get some pointers on things that they look for in the approval process for an unsecured small business loan. The more information that you have the better off you'll be.
-
2
Know your credit score - Your credit score shows a lot. Many places use this score as a means to show your ability to pay something back. No one is going to give you unsecured small business loans if they believe they will never receive the money back. Pull your credit report and try to clean up as many negative things as you can before trying to apply for any loans.
-
3
Are you profitable - One of the key factors the bank is going to look at is are you profitable. If your small business isn't profitable or has a large debt load chances are they will deny you an unsecured loan.
-
4
Paperwork - Every unsecured small business loan is going to come with paperwork. It may not be as much as a typical business loan, but you need to make sure that you have followed every step in the application process to ensure that your application gets the response that you are hoping for.
The more thorough your documentation is the better your chances. Make sure to have all of your tax documents, profit and loss sheets, balance sheets, and bank statements ready to go.
-
5
Terms - Be careful to look closely at the terms of the loan. You want to pay attention to the interest rate and the required pay back period. Some lines of credit will require you to pay back the full balance within one year but you will still have access to the funds after the balance is paid off.
Look for unsecured loans that have either a good fixed interest rate or are pegged to the prime rate.
-
6
The waiting period - The great thing about unsecured small business loans is that the waiting period is usually much faster. Many lenders will approve or deny you in a matter of a week or less. If you get denied, brush yourself off and try again. You have nothing to lose with applying elsewhere and everything to gain.
-
7
Unsecured small business loans are a great thing to have when you are trying to start up a new business or you need working capital. It's also nice if you are working with a small local bank, chances are you will be able to talk to the banker directly to discuss any issues that may arise.
For those of you who have good credit I would recommend using a lending club (see resources below for a link). They are a great resource if you need an easier approval process and quick access to cash. Not to mention they are safe to use.
-
1
