There is presently a high demand for unsecured business loan financing in the market. Many businesses today are still in the start-up stage and need all the help they can get, particularly when it comes to financing. Most business owners do not have properties that can be used as collateral and therefore, cannot apply for secured business loans.
It is good to know that there are lending companies that offer unsecured business loans or loans that do not require collateral. However, one major requirement to get approved is good business credit. If you have bad credit, that can be a huge hindrance in getting your unsecured business loan application approved.
Of course, lenders do need a guarantee that their customers will be able to pay back the loan. Since no collateral has been provided, the lender must base its decision on the customer’s business credit standing.
The amount of funding available for unsecured business loans is usually smaller than secured business loans. Most lenders offer a maximum of $50,000, depending in the customer’s credit. If you have a higher score, you can expect to get a higher loan value.
Applying for an Unsecured Business Loan
Before applying for an unsecured business loan, it’s important to get to know your options first. Aside from banks and commercial lenders in your area, don’t forget to check out business loans offered by credit unions as well.
Get to know the requirements of each potential lender so you can prepare them ahead of time. Although unsecured business loans do not require collateral and involve less paperwork, it’s important to have all documents properly prepared to avoid unnecessary delays on your loan approval.
It is strongly advised that you check your credit score before submitting your application. Having an impressive personal and business credit standing will surely win you a quick approval and enable you to get the best rates as well. Take the effort to request for a lower rate from a potential lender especially if you know that you have good credit.
Evaluate the terms of loan before signing up the contract. See to it that you will not be charged with excessive interest rates and that there are no hidden charges involved. If there are certain clauses that you do not understand, conduct further investigation to make sure that all loan terms are legal and fair.
About the Author:
Emma Collins is a credit consultant and advocate for entrepreneurs and small business owners. She has been writing articles online for about 7 years now. Corporation Support.com aims to provide you assistance in obtaining corporate credit (business credit lines) for those who want to run or expand their business.