5 easy steps to get an unsecured business loan
It is rare for banks to offer an unsecured business loan, it's either they don't offer it at all or if they do, they require so much that it's really hard to qualify. That's probably one of the reasons that you found this guide.
Other than banks, online or alternative lenders are popping everywhere lately and it's understandable to be confused which one to go with due to the fact that there's so many of them.
Don't worry, I'm here to help you better understand what you can do on your end to help you find the best solution for your business.
Step 1: Identify why and when you need funding
Before anything else, identify why you need funding and when do you need it. This will allow you to address different concerns you need to know before choosing which deal to take.
It will be easier for you to look if you need short or long term loans so that you can anticipate how long you are going to repay the loan. Some can be as short as 3-6 months to as long as 10-15 years, and by knowing this you can look at the cost and terms associated with the deals offered to you and know which fits you best.
Step 2: Consider the unsecured business loan costs & terms
Now that you know your preference, you can now consider the costs and terms that you see best for you.
Unsecured loans typically range from 9.99% to 100% APR, which is higher compared to traditional loans you get from banks. APR varies depending on interest rates, length of repayment and other fees.
Step 3: Check if you meet the minimum qualifications
Now that you have identified which lenders you like, it's time to see if you meet the minimum requirements that they ask. Usually, but still depending on the kind of funding you are getting, these minimum requirements vary.
Some of the most common are:
- Annual revenue of $100,000 or higher.
- Age of the business (At least one year).
- Minimum personal credit scores of 600 and higher.
- Personal guarantees and blanket UCC filings.
Step 4: Get your documents ready
Online and alternative lenders require minimal documentation compared to traditional lenders. Just the trips alone to the banks is hard enough to do.
This is one of the reasons a lot prefer online and alternative lenders now, minimal requirements and can be done in just a few minutes.
Step 5: Apply for your unsecured business loan
Now that you everything sorted out, you should be prepared to apply for the loan you like. Online applications take as fast as 5-10 minutes and you get to know if you are approved within 24-48 hours.
I hope that helped you understand the basics of unsecured business loans!