If you run a small business you will need to fund your operations. There are many ways to do this some companies prefer to use a petty cash fund which they keep on hand while others preferred to run a line of credit. If you require funds above and beyond your daily operations however you will need to get some type of loan. If you are not making a specific purchase such as real estate however it can be difficult to do this. Today we will explain how an unsecured small business loan works and what to expect from the process.
An unsecured small business loan is a loan that is not backed by a specific asset. What this means is that there is no specific repayable asset in the event of nonpayment. This has several implications for a lending institution and many lenders will not give out loans of this type. So how do you go about getting a loan if you are not backing it within the assets?
To begin this process you must first have a clear business plan that you can show to lenders to demonstrate your viability. The best way to set up a business plan if you have not done so already is to contact the small business administration of America. The SBA can assign and agents to your company to look over your finances and determine how to set up a business plan for you. It is important to note that this is a thorough document which shows all of your potential costs and revenue. It is not enough to simply have a general outline when you are seeking an unsecured loan.
So if you have a business plan now where do you go to look for your small business loan? Once again the SBA is a very powerful resource to this end. You should ask your agent if he can assist you in finding an appropriate lender for your circumstances, chances are there will be several lenders who are willing to lend money to companies like yours. Once you have a group of lenders that you should deal with you will need to follow through their specific guidelines and requirements in order to obtain a loan. Typically this includes demonstrating a business plan, your current and past revenue, and in many cases demonstrating good business credit as well. For further information you will need to speak with the loan officer at the lender which you are attempting to get an unsecured small business loan from.