Unsecured business loans are gaining popularity with start-up companies and established businesses alike. Small business owners are coming to the table with enthusiasm, goals of all shapes and sizes, and questions about how to reach fiscal sustainability. One of the most common queries is who qualifies for unsecured loans? This article will give you the straight answer to this question.
Surfing in White Noise: How to Navigate Through Expert Advice If you clicked on this article, it’s because all of the so-called “expert” advice on unsecured business loans has you confused. Well, take comfort, you’re not alone. As helpful as lenders are trying to be, all of the information on unsecured funding is enough to make your head spin. For example, let’s look at the credit requirements. What you read just now probably gave you pause. That’s good. If you thought unsecured loans don’t require a credit check, it’s not your fault. This common misconception has been used as an advertising ploy to get unsuspecting borrowers in the door. It’s not a lie, it’s a question of semantics.
Potato, Pot-a-toe: The Truth about the No Credit Check Motto A lot of lenders can say they don’t require a credit check simply because they don’t choose to call it that. The credit check is veiled under terms like “payment capability” or “proven profit margins,” but the truth is in order to qualify for unsecured business loans, you need to have some type of credit already established. Now, it doesn’t need to be as strictly defined as it would be for a traditional loan, but you do need proof of a credit record. The following items are usually acceptable: • A credit score of 660 or higher is ideal as it nulls the
By the Book: The Basic Qualifications for Approval Not everything about unsecured financing is up for debate. There are some basic qualifications all borrowers have to meet. They include: • Place of business must be established in the U.S. • Place of business must be in operation at least 6 months, or at most 2 years depending on the funding sought. • Borrower must be 18 years of age or older at time of application. • Business must have a domestic bank account. Approval is not guaranteed. If you are denied, find out why, fix it, and try again. The best piece of advice concerning this process is to network with local lenders and establish strong lending relationships with a select few. That way, qualification is never a problem because you’ll always know what to expect. That’s a valuable asset to any business.question of credit all together. • A previously established credit history on record with the Small Business Financial Exchange. • Evidence of payment schedule adherence for any open credit lines. • Revenue/sales records that verify you can pay the loan back. As previously discussed, the qualifications vary by lender, so the easiest way to make sure you have the appropriate documentation is to ask the individual lender.