Obtaining unsecured business loans can be simple when you know what an unsecured business lender expects of you. The best way to qualify for any type of unsecured financing is to prepare yourself to meet lender expectations. First, you must understand those lender expectations. Once that is understood you can focus on preparing yourself to get approved for your fuding. In short, an unsecured business loan is a term loan offered by a bank or lender that does not require you to pledge collateral to be considered for approval. That’s right, it means you don’t have to pledge your personal or business assets to get the funding. Now that you have a basic understanding of this, here are four ways you can prepare yourself to get approved:
- Build and maintain a good personal credit history – since you don’t have to pledge collateral to obtain an unsecured business loan, the lender will focus more on your personal credibility to determine if you qualify. This means they will most likely pull your personal credit to determine whether or not they should approve you for an unsecured business loan. The wisest thing you could do is start building and maintaining a good personal credit history now so you’ll have a better chance at getting approved for an unsecured business loan in the future.
- Maintain long term employment – lenders will want you to show verifiable proof that you can repay the unsecured business loan. Therefore, if you still have a 9 to 5 and are not running your business full time yet, it could help your chances of getting approved if you have been employed for at least 6 months. They may ask to see your check stubs to verify your employment so it would be wise to have them ready so you can be prepared if they ask to see them.
- Develop a well thought out and researched business plan– some lenders may ask to see a business plan with at least 3 years of accurate and realistic financial projections. It would be best to develop a well thought out and researched business plan that clearly displays to a lender what your business is all about, your target market, how your company will benefit your target market, and how you will advertise to generate sales and leads so you can make money to pay them back.
- Invest some of your own funds into the business – you may significantly increase your chances of approval if you can show the lender you will invest some of your own personal funds into a business. Lenders may only be willing to take a risk on you if you are willing to take a risk on yourself. Show them that you truly believe in your business and are serious about it by investing your own money into the business.
Now that you understand how to prepare yourself to get approved for an unsecured business loan the simple way, there is one last important fact that you should keep in mind before you approach a lender. Unsecured business loans can have higher interest rates than a regular term loan since there is no collateral required to be pledged. Although that does not automatically mean that the rates and terms are bad, you should make sure that the terms make sense. Some have very attractive terms and some are quite expensive so do your homework.
Brittni Abiolu is the Owner & Publisher of www.CapitaLinker.com. Through her website, she serves to educate entrepreneurs and small business owners on how to increase their chances of obtaining capital in the simplest way possible and how to find and connect with the most appropriate funding sources. You can connect with Brittni on Linkedin, Google+, Twitter, Facebook, and Pintrest.
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