Banks and lenders will ask for collateral as a qualification to acquiring a business loan. However, you can get your hands on unsecured business loans if your credit score is high. No collateral is required as the lender will only analyze your creditworthiness as the major qualification to acquiring an unsecured loan for your business. The major obstacle facing most entrepreneurs is the limited capital and limited means to acquire it. Not everyone can obtain an unsecured loan for business. Entrepreneurs with a high credit score can enjoy unsecured loans without the need to put up collateral of the same amount. When shopping for unsecured business loans, you should ask yourself the following 5 vital questions:
How much do you want for a loan?
Most lenders will set the unsecured loans at a minimum as they are unsecured. It is risky move and thus they do so to minimize the risk, in case the one acquiring the loan fails on their part. Depending on how much you want, you need to have a high credit score with the credit bureau. If you want financing for a startup business, you need a clearly detailed business plan, disclosing the expected cash flows of the business once it is fully established. This will help the lender to determine whether you are eligible for the amount you are applying for.
Are you qualified for the unsecured business loan?
Your credit score will determine your credit worthiness and whether you qualify for the unsecured loan or not. Before you make the move to apply for unsecured business loans, you need to build your credit score with the credit bureau, as it will be the basis for qualification.
How long will the unsecured loan take to process?
If your credit score is in check, unsecured loans take a short period to process. Not much paperwork is required as in the case of secured loans. Once the lender has confirmed your credit worthiness the processing of the loan will start immediately, and you can receive the loan within 24 hours. Choose lenders who have fast processing period for their unsecured loans. It will help you to kick start your business project as soon as possible.
What is the market interest rate for unsecured loans?
The market interest rate for unsecured business loans will give you an idea of what you should look out for when shopping for a suitable interest rate. Choose lenders with the lowest interest rates.
When is the due date for the full repayment of the loan?
It will depend on how fast your business can start making profits to start with the repaying the loan. If you have already established the business, you can start paying immediately and hence a short period on the due date will be manageable.
Once you have answers to the above, you can explore your options of acquiring unsecured business loans. Choose lenders who have fair terms and make sure that there are no hidden charges to the unsecured loans they offer.