For many small business owners, unsecured business loans are the most accessible method of financing available in the market. Because these loans do not require collateral, it is technically easy even for business owners who do not have valuable assets. This article presents your options when in need of an unsecured business loan.
What to Expect
Lending companies extend business loans without requiring collateral because not everyone can qualify for a secured loan. However, unsecured business loans are often limited only to a small amount of financing ($50,000) and do require the applicant to have good or impressive credit.
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If you are an owner of an established business with good business credit, applying for an unsecured business loan should be easy. Needless to say, lenders are looking for a solid assurance that you are capable of repaying the loan according to your lender's terms and conditions. Because no real property has been submitted as guarantee for the debts you owe, lenders would be evaluating your loan application based upon the merits of your credit history.
But what if you are the owner of a new or a start business? What if you have yet to establish business credit? In reality, it can be a big challenge to get approved for unsecured business loan. Without business credit to back you up, it will be more difficult to convince a lender to finance your business needs.
The same is true for businesses with a bad credit history. Although it is possible to find lending companies that offer unsecured business loans for bad credit, 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
If you want to apply for an unsecured business loan, it's important to do extensive research first and get to know all your possible options. The only way you can be certain that you are being offered a good deal is by comparing different lenders.
Look out for predatory lenders who are only after one thing - making profit in the expense of borrowers. Some lenders may take advantage of you particularly if you have bad credit and cannot qualify for standard loans. You may be offered instant approval regardless of your credit rating. Is there a catch? The catch is that you will be charged with expensive interest rate and fees all throughout your repayment term.
Make sure that you are dealing with a legitimate lending company before submitting your loan application. Understand the process involved and the necessary paperwork that you need to prepare. Do not try to use false information in an attempt to get approved as such a move will only complicate your situation.
Do not submit multiple applications at once. Instead, weigh your options carefully and submit only an unsecured loan application to the right lender. Keep in mind the each time you submit an application to a lender, an inquiry will be made in your credit and all inquiries will be reflected in your report. Such a move can send a negative impression to a potential lender.
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