If you have a small business may need to borrow money for some general-purpose, as opposed to for specific purpose like equipment purchasing or real estate. If you have the available funds on hand, then unsecured small business loans may be a good solution for you. We will be discussing how these work in today’s article.
Unsecured small business loans are unsecured due to the fact that they are not backed by any specific asset. The distinction between secured and unsecured is simply a matter saying is there a particular item being purchased and is an item something that the lender has the authority to repossess in the event of nonpayment. If the answer to this question is no then you are looking at an unsecured type of loan. Secured loans typically are things such as real estate and vehicle purchases which are inherently backed by those assets.
The distinction of being a loan for small businesses depends on which institution is offering the loan. Typically this distinction refers to any company with less than $100,000 of yearly revenue or with fewer than 500 employees. If you are using the small business administration to assist you in obtaining your loan you should discuss with your local agency the requirements for your company to qualify. There are also be specific requirements for each individual lender and you should discuss those requirements would those lenders at the time that you discuss the details of any potential loan.
In order to qualify for unsecured small business loans you must meet certain criteria. First you must meet the criteria as outlined above in that you are a small business. Also, you must demonstrate your credit worthiness through your businesses credit report and score. This report is separate from your personal credit report and operates on a 600 point scale. It is a good idea to running purchases through your credit report is much as possible in order to build up your credit history and through this increase your score. You will also likely need to demonstrate your financial help by furnishing a number of accounting documents. For a list of standard accounting documents which will be required you should contact the SBA in your area to have someone walk you through this process.
Unsecured small business loans are loans that are not backed by a specific asset and are designed specifically for small companies. They require a fair amount of paperwork for authorization and offer competitive rates.