Good personal credit is needed to qualify for unsecured business loans. In fact, the majority of small business financing programs require the business owner to have a good personal credit history, (although there are options for business owners with bad credit). Having a good personal credit history will increase the number of options available to you to finance your small business.
Unsecured business loans and lines of credit are what I call the “gems” of small business financing. There are a number of reasons I like this type of financing for small business owners, as well as a number of reasons why you need good personal credit to qualify for it. Below are the top three reasons why you need good personal credit to qualify for unsecured business loans (and why it’s my favorite way to finance a small business).
- No Collateral Required – Unsecured business loans are “unsecured” meaning that you are not required to pledge collateral to get approved. I like this because if you don’t have significant collateral to pledge, you can still get approved. This gives entrepreneurs with dreams of starting and/or growing their small business the option to do so whether or not that have assets to pledge as collateral.
- No Business Track Record Required – Unsecured business loans can work well for startup business owners. Most types of small business financing options require that the business have a proven track record (i.e. revenue generated consistently over a period of time). The good news is that entrepreneurs who are just starting out may be able to qualify for unsecured business loans. I like this because it gives entrepreneurs the chance to fund their dream business and proven the business concept so they will be able to obtain other types of small business financing in the future.
- Get Funded Fast – Unsecured business loans can be obtained fairly quickly if you qualify. In some cases, obtaining small business financing can take up to 6 months (depending on the type of financing). I like unsecured business loans because if you’re in need of immediate financing, you can usually get the money fast after you are approved. The process of applying and getting an approval decision is pretty fast and simple.