These days, there is a great demand for unsecured business loan financing as more and more people fight the economic slump by starting their own small businesses. For a lot of new business owners, applying for a secured business loan is not an option because they do not have properties to submit as collateral.
It is good to know that there are lending companies that extend unsecured business loans or unguaranteed loans. However, one basic requirement to get an unsecured business loan is to have an impressive credit. If you have bad credit, it would be very difficult to get business financing, especially if you do not want to submit collateral.
How much can you expect when you apply for an unsecured business loan? Because of the lack of security, lending companies offer a limited amount of financing. Typically, unsecured easy business loan will not exceed. The amount of loan you can get will still depend on your credit score. Of course, a higher credit score would give you access to a higher loan value.
Applying for an Unsecured Business Loan
Before submitting your unsecured business loan application, be sure that you have done research and comparison. Apart from banks and commercial lenders, it’s also a good idea to try to check out business financing options that are offered by credit unions. Loans offered by credit unions are meant to assist small businesses and usually have lower interest rates compared to standard loans or bank loans.
Find out the specific requirements that you need to submit so you can prepared the paperwork in advance. Take note that each lender may have different requirements and not submitting the right set of documents or missing a single requirement could cause your approval to delay or may even cause your application to get denied.
Although unsecured business loans do not require collateral and involve less paperwork, you will still be required to submit proof that you are managing a legitimate business, your business plan (for start up businesses), and copies of your business finance sheets and tax returns.
It is also recommended that you check both your personal and business credit (if applicable) report prior to submitting your loan application. It is important to remember that errors in your report may cause your score to drop a number of points. Checking your credit standing in advance will give you the opportunity to request the credit bureaus to correct the errors and improve your score. Again, take note that a good score will give you the advantage to ask for lower interest rates and more flexible repayment terms.
Carefully study the terms of your unsecured business loan before signing up the contract. Make sure that you will not be charged with unreasonable interest rates or hidden fees while in the middle of your loan repayment. If there are terms in your contract that you do not understand, do not hesitate to do further investigation to be certain that the terms of your chosen lender are legal and fair.