What is an Unsecured Business Loan?
An unsecured business loan means there will be no collateral backing the loan. Yes, this type of lending can be risky for lenders, because they are simply relying on the cash flow from the business. For this reason, borrowers normally need to have a good credit score and should be able to present their personal financial statements. In addition to this, the business should be able to show a strong cash flow in order to service the requested funding.
Improving Your Chances of Getting an Unsecured Business Loan
To speed up the process, it is important that you are prepared when you go in to apply for a loan. Today, we are going to tell you what you can do in order to improve your chances of getting that unsecured business loan faster.
Accounts Payable and Receivable Statements
When you go in to get this type of loan, the lenders will want to see your accounts payable and receivable statements for your business. The lender needs to see this to make sure payables are being paid on time and the receivables are coming in on time.
Business Financial Statements
Lenders need to see the business financial statements, because they need to see the ability of the business to repay the loan based on their cash flow. Tax returns, historical business income statements and historical balance sheets will need to be presented. If this is a new business, you will need to present your financial projections.
Business and Personal Credit Reports
It is important that you understand your personal credit score. If you have a credit score that is low, explain why. High credit limits, late payments, judgments and bankruptcies will obviously have an effect on your score.
Business Plan and Projections
Most lenders will want to see how prepared you are and would like to see your business plan along with your financial projections. Borrowers who can show the lender that they know where the business are going will have a higher approval rate.
Personal Tax Returns
Some lenders take the personal financial strength into consideration. Lenders will want to verify your income, so they would like to see a transcript of your tax returns.
If you would like to improve your chances of getting an unsecured business loan faster, it is important that you make sure you have everything read. Some lenders are able to give you money in as little as 48 hours, as long as you have the proper documents ready.