Small business startups typically have a limited number of funding options outside of the owners personal savings. Most traditional banks and alternative lenders require the business to have a track record (i.e. proof of consistent sales and revenue). If you’re small business startup is still very new, with no customers (or a small amount of customers) and revenue, most likely you’ll only qualify for two funding options. These funding options include unsecured business lines of credit and SBA microloans. Before applying for an unsecured business line of credit or SBA microloan, it’s important to know what criteria you need to meet to qualify.
How to Qualify for an Unsecured Business Line of Credit for Your Small Business Startup
To qualify for an unsecured business line of credit you’ll need a legally registered business with a TAX ID and a good personal credit history. In my experience as a small business funding expert, unsecured business lines of credit can be the simplest, quickest, and easiest type of capital to obtain for a small business startup. The hard part for some people, is meeting the credit qualifications.
Lenders will use your personal credit history to determine if you qualify for unsecured business lines of credit. They will also require you to personally guarantee that you will pay back what you borrow in the name of the business. You are not required to pledge collateral or submit extensive financial documentation (such as tax returns, bank statements, proof of income, etc). Lenders rely primarily on your personal credit history and personal guarantee as a promise you will pay back what you borrow on time. As long as you have good, well established personal credit history, you have a good chance of qualifying for an unsecured business line of credit.
LenCred specializes in helping small business startups get unsecured business lines of credit. If you think you may qualify (or even if you are unsure) contact our advisors today to get more information. Our advisors have helped small business startups get up to $200,000 in funding to launch and grow their business.
How to Qualify for an SBA Microloan for Your Small Business Startup
To qualify for an SBA microloan, you will need to have a legally registered business, tax ID, a business plan with at least 3 years of financial projections, and other supporting documentation such as your personal and/or business tax returns. Microloans were created for entrepreneurs who don’t qualify for traditional financing or financing that requires exceptional personal credit (like unsecured business lines of credit). Therefore, the lenders that offer this type of financing require more information from you to determine if you will be approved or denied. There are SBA microlenders in just about every state. To learn more about what you need to do to apply, contact the microlenders in your area. You can go here to find the microlenders that have been assigned to your area.