Today will be discussing in detail some things to consider and to understand about unsecured small business loans. In general loans of this type are specifically designed for companies with less revenue and with less time in business. Typical bank loans require very stringent criteria be met as a requirement for funding and loans of this type are a way for small companies to obtain funding without meeting these requirements. You should have an understanding of what these requirements are and how to go about getting a loan by the end of today’s discussion.
Unsecured small business loans are different from large business loans in that they do not require the same standards be met. For example, is common practice to require a company to make over $100,000 a year in revenue in order to be funded. This is simply not realistic for many small companies and as such this subset of small business loans was greeted to assist these companies. Furthermore many small companies are still just getting started and do not have extensive business history as many larger scale companies might. It is not uncommon to required 10 years of business history to look over in order to determine a company’s eligibility. Once again this is not a realistic expectation for many small companies and is typically waived for this specific subset of loans.
So who offers loans of this type? Many different types of lenders will offer unsecured small business loans some of which are major banks and many which are nontraditional lenders. They are typically set aside and are approved by the small business administration of America. We’ll discuss the SBA in further detail in a moment. Most banks will have a set of funds that are for small businesses only. Although you will pay slightly higher interest than large-scale corporations you will pay less money by obtaining a loan of this type from a bank then you would through most nontraditional lenders. However there are differences in the requirements.
All lenders will want you to have a well organized business plan that demonstrates your viability. But banks will also have some additional requirements. Most banks require that you demonstrate good credit and that you have a good business credit score. If you have not established any credit for your company yet this may be a difficult requirement to meet. Which loan you get will largely depend on your qualifications and you should speak with the SBA to have him assist you with finding an appropriate lender.