Small Business Success: Unsecured Business Loans
We’ve talked about a lot of different financing options for SBA loans to rollover for business startups and even portfolio. But one we haven’t talked about is unsecured loans. Now lots of entrepreneurs across the country are utilizing unsecured loans as a way to capitalize a small business or franchise because it allows them to gain access to capital without using their personal assets as collateral for the loan. Instead banks look at the credit worthiness as the deciding factor and it’s very fast for individuals that are running up against a particular time line. They appreciate the unsecured loan because you can secure it in less than three weeks. Now you can think about it more like a small business credit card using multiple lines of revolving credit. You can put together $25,000 to $250,000 for your small business and there’s no use of proceeds requirement. So you can use it for any ordinary or necessary business expense.
But it’s important to note that because the bank is not taking your personal assets as collateral that there probably will be a larger interest rate assigned to that loan. Now what does it take to qualify? So if you have a credit score above 690, if you utilize less than 50% of your existing revolving limit, if you had less than 2 increase on your credit in the last six months and no derogatory credit in the last six years, you could apply what we approve for this type of loan. So if you think that this particular option is an attractive one, one that may come with a higher interest rate but doesn’t use your personal assets as collateral.