How to Get Unsecured Business Loans
A business can only go as far as its working capital will allow, and in the early stages, that usually isn’t very far. Most entrepreneurs need a little help to boost their cash flow and end up turning to banks and various lending sources to get the extra funds. For the business owners who need money and don’t have collateral to offer in return, unsecured business loans are usually the best option. If you have your finances in order and a sound business model, you can get approved for a line of credit that will help your cash flow in any way you need.
Make a Plan
Secured loans aren’t necessarily easier to get, but the use of collateral does help direct the process a little. Without a guarantee to offer the lender, your application relies on your ability to convince someone that you’re worth lending to. No smoke or mirrors are required; you simply need to come up with and present a complete model for how your business will spend the loan and how that spending will directly result in additional income. Hopefully you already have a good business strategy and your loan application will just be a thorough presentation of existing plan.
Naturally, you won’t be able to see the future and predict exactly how money will be made and paid back to the lender. Your best bet is to show previous earnings reports and use a little bit of crafty math to infer how those numbers will go up if you have an influx in cash flow. Since unsecured business loans have shorter terms, the strategy you present should depict a fairly immediate turnaround.
Be a Good Candidate
People aren’t offered business lines of credit because they have “decent” credit and credentials. The only reason you’re able to borrow money without putting up collateral is because your credit score and history make the lender feel confident that you aren’t a risky choice. It’s important that you have your credit score, business or personal, at a very respectable number. You’ll also want to keep outstanding debt to a minimum. These things are easier said than done, but they are often the difference between getting approved and getting turned away.
Your company doesn’t have to put forth collateral to get a loan, contrary to anything you’ve heard. As long as you can give the lending company a reason to believe that you’re worth the investment, unsecured business loans may well be the best option that’s available to you.
