How to Get A No Collateral Unsecured Business Loan
There are many types of business loans available for your company depending on what you are using the funding for and how you are securing the loan. There are even some types which do not require collateral that you can take advantage of. To find the right loan for your needs, you will first want to understand what collateral is, what an unsecured loan is, and how you can apply for each of these types.
What Is Collateral?
In the most basic of senses, collateral is the thing you use to secure a loan. If you default on the loan, then the lender can take and sell the collateral for the repayment. This can be anything from the equipment in your company to the property you own and even the company itself. Collateral will usually need to be worth as much, or more than, the total amount of the loan as determined by the lender.
What Are No Collateral Loans?
Business loans with no collateral are those where your credit, or that of your company, are taken into account instead of the worth of your collateral. In other words, if you have a no collateral loan, then your lender has decided that you have a good enough history of repaying loans, and enough of an ability to repay the loan, that it is worth the risk to extend you credit. These are harder to qualify for because you will need to have established a good amount of healthy credit history.
What Is Needed To Apply?
You can apply for various loans with the help of a broker. He or she can help you gather all of the relevant documentation, such as debt and income statements. You can also check on the health of your credit and find ways to improve that before applying for a loan with the help of a broker or through the business credit bureaus.
Business loans can be either secured or unsecured, depending on whether you have put up collateral on the loan. Most of the time, it is harder to get an unsecured loan because you will need to have a good credit history and a small debt-to-income ratio. However, not every company has collateral that can be used to secure a loan. Before you gather the paperwork and apply for a loan, it is a good idea to research both types and see which is the best fit for your company.