Getting an approval for unsecured loans for business used to be relatively easy, but this isn’t always the case anymore. With the existing challenges in our economy today, loans of all types are now more difficult to acquire. This is not to say you shouldn’t make an attempt to get approved, even if you have bad credit. Many lenders in small business financing are still funding applicants with poor credit as long as other conditions are met. In fact, there are many merchant lenders just waiting on deck for the next application to review.
If you want one of these coveted small business loans, you need to be well informed and then use that information wisely to increase your chances of getting approved. If you’re willing to do things in the most advantageous way, your odds of success will improve dramatically.
Our loan agents at Business Lending 24/7 can help you with your business financing needs including but limited to the following:
– restaurant capital
– buying a building
– financing inventory
– contractor loans
– funding for growth
– mom and pop shops
– loan for construction
– and many more…
Use these 6 tips to your best advantage:
- Keep your day job. Some lenders today want to see an additional source of income, preferably one that is capable of repaying the loan. If your only source of income is going to be the business for which you are seeking the loan, it could be a tough sell right now. Unless you have been in business for at least 6 months and have at least $5,000 of revenue each month. So you may want to consider keeping your job, at least until after you’ve been funded with a loan.
- Have some collateral. Be prepared to have liens placed against any significant assets you may have, especially if your business hasn’t generated much revenue yet. It’s more difficult to get unsecured loans for business if you don’t have any meaningful assets.
- If you don’t have a lot of assets, it just means the other parts of the approval process will have a greater level of importance. If you have a good idea and the expertise to make it work, you’ll find someone willing to help. Also, if you have enough revenue coming in, this can be acceptable in lieu of assets. In fact, our merchant lending partners here at Business Lending 24/7 prefer to see revenues over assets.
- Maintain excellent records. The one-page application is rarely seen in today’s economy. You’ll need a lot of qualifying information just to apply. Taking this into consideration, you might as well go ahead and have hard copies of everything ready to go. This includes bank statements, your company’s financial statements, income tax documents, pay stubs from your current job (if applicable), verification of assets, and more.
- Have a business plan ready. Having a solid business plan in place helps to put the lender’s mind at ease. Include all the information related to the operations of the business, the people involved in the running of the business, their experience, and reasonable income projections. For existing businesses, providing historical revenue and expense reports will be helpful, if not required. Also include ways you will be improving the operational efficiencies and your plans to increase sales and decrease expenses, if possible.
- Remember, merchant lenders who approve unsecured loans for business see business plans every day. If your projections have been embellished, they will know it. You’ll lose their trust and will very likely be declined.
- Appear respectable. Your potential lender will be crunching a lot of financial data during the decision-making process. However, there is also subjective evaluation going on as well. Your lender will be trying to determine whether or not they confidently expect you to be the type of person who will repay your loan as agreed upon.
- They will also attempt to figure out if you’re the type of person who has the ability to turn a loan into a stream of income. Your education, experience, and references will all be taken into consideration.
- Ensure your credit is solid. Your credit history can be a very important part of the loan approval process. Be sure you have knowledge regarding everything in your credit report, whether it’s good or bad. If there are any mistakes that are damaging, attempt to have them corrected before completing the loan application. Also, do everything possible to repair any negative information.
- If you have bad credit, it’s ok! Our network of lenders will not reject an application just because you have bed credit. We have specifically selected lenders who specialize in business loans for bad credit. If the business has been open for at least 6 months and you’re generating at least $5,000 of monthly revenue, you can get approved for a merchant cash advance, small business loan, or business line of credit.
As with a lot of things, the devil is in the details. Following the above tips is not meant to serve as a guarantee that your application will be approved, but it can dramatically improve your odds of success. Be patient and take the time necessary to put the odds in your favor. Getting approved for a small business loan might not be easy, but it can be done!
Once you have been approved for unsecured loans for business, before you sign the agreement, be sure you have reviewed and accept the business loan terms. Paying attention to these items will help you decide if the terms will work for you or not:
- What is the total cost of capital? In addition to the interest expense, be sure to take into consideration any origination fees along with any other loan related fees.
- What is the APR (Annual Percentage Rate)? Is it competitive, and most importantly, is it fair based on your current financial situation. For example, if you have little to no revenue, or less than perfect credit, you shouldn’t expect the lowest APR.
- What is the average monthly payment obligation? Consider this along with your monthly budget, regardless of whether the lender will take payments daily, weekly, or monthly.
- What is the total amount of interest paid per dollar borrowed? This can be viewed as a percentage that represents cents on the dollar.
- Are there any early prepayment fees? If your revenue increases faster than expected, and you decide to pay off the loan early, you won’t want any surprises.