How To Get Unsecured Line of Credit for a Business Easily – When starting a business, it’s important to have the right tools and equipment to get the job done. One tool that many new businesses need access to, but can’t easily afford, is an unsecured line of credit (LOC). This guide will walk you through the process of getting an unsecured line of credit (LOC) for your business quickly and easily. Whether you’re buying new equipment or making improvements to your storefront or office space, you’ll be able to take care of it all within weeks instead of months.
Step 1: Checking your Credit Score
An unsecured line of credit is not to be confused with a secured loan, where the borrower places an asset (a house, stocks and bonds) as collateral in case the borrower defaults on their payment. But this doesn’t mean your credit history doesn’t matter. Lenders will typically look at how many lines of credit you have open, how often you’re late making payments, how much debt you have relative to your total available credit, how high your balances are relative to your limits and how long it’s been since you’ve opened an account before they decide whether or not they want to grant you an unsecured line of credit. Most experts recommend checking your score before applying for any kind of loan.
Step 2: Pre-Approval Process For Unsecured Line of Credit
You can often pre-approve for a business line of credit with the bank that you have your current account at. That way, if you decide to pursue the line, you’ll know what size loan amount is required. From there, you’ll need to go through application and underwriting processes which may include more time and money investment on your part. You may also be able to apply for different types of unsecured lines of credit based on your needs; revolving lines are typically easier to get approved than term loans or bridge loans because they’re seen as less risky investments by the bank.
Step 3: Requirements For Unsecured Line of Credit
When it comes to securing an unsecured line of credit, your goals are twofold: one, you need enough cash on hand to cover what you want the line of credit to finance. And two, you want as little paperwork as possible so that you can close the deal quickly. Meeting these requirements will depend on your relationship with your bank and whether they have any additional fees or policies. For example, if you’ve been doing business with them for a long time and maintain good standing in their eyes, they may be more willing to overlook some requirements when it comes to obtaining an unsecured line of credit. On the other hand, if this is your first transaction with them or if there is something in your history that would make them wary (e.g., poor repayment history), then meeting those requirements may not be easy at all. Regardless, it never hurts to ask. If your relationship with the bank has been strong, you may be able to get an unsecured line of credit with less than perfect credentials. However, even if you don’t meet every requirement, don’t give up – a bank might still approve your request if they feel like they’re getting a fair trade-off. You’ll just need to weigh the risks and see how much wiggle room you have before deciding how much documentation is worth giving up.
Step 4: Finding your Best Lender For Unsecured Line of Credit
Do you have the best lender? Most banks offer unsecured line of credit loans and they’re generally affordable, but some provide better rates than others. With unsecured lines of credit, you put up your own property or possessions as collateral to get the funds. From personal experience, I know that just about any bank will offer an unsecured line of credit loan, but some banks may be able to offer better rates.
Step 5: What are Personal Guarantees?
Personal guarantees are basically the same as putting up collateral but in this case it’s your credit. If you’re lending to someone, and that person decides not to pay you back because they’re unable to make good on their loan obligations, then you will be on the hook for that debt. In other words, if they default on the loan or finance agreement, then you will be responsible for making payments or paying off the debts. It may sound like an unlikely scenario but without some sort of financial assurance then banks and lending agencies would not consider lending money at all.
Step 6: Applying to Banks that Specialize in Small Business Loans
Once you have all your paperwork ready, it’s time to reach out to the banks that specialize in small business loans. Banks are hungry for your business and will generally try to make sure you are successful. Remember that just because one bank does not offer an unsecured line of credit does not mean another bank won’t. This is why it is so important to apply with multiple banks! The whole process may take days or weeks, but with persistence you should be able to get what you want.
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