For many small businesses, unsecured business loans are the most practical financing option since these loans do not require submission of collateral in return. If you are a small business owner in need of financing, this article discusses your possible options when searching for an unsecured business loan.
What to Expect
Because of the absence of collateral, lending companies that extend unsecured business loans offer a limited amount of financing when compared to secured business loans. Typically, the amount of loan available will not exceed $50,000, depending on the qualifications of the loan applicant.
Needless to say, a good business credit history is a crucial factor when applying for an unsecured business loan. Take note that lenders are looking for reassurance that you will be able to pay back the loan according to the terms stipulated in your contract. Since no real property is submitted as guarantee for the loan repayment, lenders would be granting your proposed loan based upon the merits of your credit history.
For this reason, businesses that have yet to establish business credit would find it a challenge to get an unsecured business loan. In addition, those who have a problem with their corporate credit rating may have a difficult time getting approved as well.
It is possible to find lending companies that offer unsecured business loans for bad credit although you can expect that the available loan amount would be limited to a smaller value and the interest rates would be much higher than standard unsecured loans.
How to Get Approved
Before submitting your unsecured business loan application, be sure to do extensive research to make sure that you are getting the best possible deal.
Watch out for predatory lenders who may take advantage of a bad credit situation. These lenders may offer quick approval despite your poor business credit but impose excessive interest rate and fees. Furthermore, see to it that you are dealing with a legitimate lending company with a clean track record of service.
Check the prerequisites that you need to submit, particularly the paperwork. When filling out your business loan application, be sure that the details you provide are correct. Never use false information to try to get approved since such a move may only cause trouble later on.
Do not submit multiple applications to different lenders at once. Keep in mind that too many inquiries on your credit can damage your credit score and send a negative impression to a potential lender. After careful consideration and making your final choice, that’s the only time you should submit an application.
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.