Are you a startup or small business? If so, you may find it difficult to apply for funding through a traditional lending source. Often a traditional lender, such as a bank, wants you to provide collateral to pay the loan back. If you default on the repayments, the collateral is used to recover the loan balance.
An Alternative Type of Financing
If you wish to secure an unsecured loan, you need to go to an alternative funding source. Normally, if you request a loan that is unsecured, you need to pass a credit check. If you do, you will qualify, in most instances, for an unsecured loan. Typically, you can borrow between $1,000 and $250,000. If you are a startup and do not possess the assets required to use as collateral, this alternative type of financing provides an excellent solution.
Applying for an Unsecured Loan
Today, unsecured business loans can be obtained online. Therefore, you do not have to visit a brick-and-mortar bank to try to get a loan. You only need to have an Internet connection and a business bank account. As a result, obtaining this type of loan is straightforward. All you need to do is complete a quick online application that includes your business credit history. Once the form is completed, you can start using the funds, provided you meet all the qualifications.
Some of the basic information that is requested for an unsecured loan is as follows:
- The loan amount must be included. If you are not sure what to insert, it is better insert a higher amount than a lower loan amount.
- The purpose for the loan. The lender will need to know how you plan to use the loan money. Some business owners need startup capital to launch their business while others ask for a loan to resolve cash flow Maybe you want to expand your business over a specific period, and need the capital to make it happen. Regardless of your reason for funding, the lender can structure the pre-approval to meet your investment objectives.
- Credit history. As noted, the credit history must be included for obtaining funding. Because an unsecured business loan does not require collateral, your credit rating is an important piece of information.
What You Will Need to Provide
Normally, you need to provide bank statements for the last six months and a driving licence, for identification, in order to proceed. While you do not need to provide security, it can help strengthen your loan application if you want to borrow a larger amount. In this case, you may want to provide an auto or real estate for collateral.
Pre-approval Is Quick
The pre-approval application form, that is featured online, takes about five minutes to complete. You should have been trading for last least six month and have a solid monthly turnover of at least $6,000. Interest rates for unsecured loans start from 1.80% monthly.
Who Normally Applies
An unsecured business loan is an ideal funding source for such businesses as retail stores, cafes, restaurants, and service providers. Tradespeople prove to be good candidates for the loans.