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Are Unsecured Business Loans Right For My Company?

October 2, 2017 in Small Business Financing, uncollateralized funding, Unsecured business loans

Are Unsecured Business Loans Right For My Company?

While many small business owners are aware of unsecured business loans, many of them also don’t quite understand whom the loans are meant for. Is my company too small? Too large? Is an unsecured business loan right for my company? It’s important to ask these kinds of questions when pursuing your all the options that are out there for obtaining capital. In this article, our experts will provide concise answers to your questions to help you.

What is an unsecured business loan?

While  secured business loans requires collateral, such as your house, car, 401k, inventory or account receivables, unsecured loans require you to pledge limited collateral such as receivables, chattel and paper that only apply to your business. In fact, unsecured loans don’t take away your personal assets if your business hits a rough patch and you have trouble making payments, or default on the loan. In contrast, if you do struggle to make loan payments we focus on helping you find solutions to correct the problems, improve your working capital and get current again. We’ve found this to be a more valuable practice.

In terms of amounts, unsecured business loans can range up to $500,000 of principal, depending on your business’s track record and growth potential.

Does my credit score have to be high to obtain a business loan?

If you’re pursuing  unsecured business loans, you may be relieved to hear that we don’t prioritize credit scores like a bank does. The model is extremely out of date and makes up the majority of denied loan decisions. According to the Mission Asset Fund, businesses are mostly often denied loans because of “having no credit history or a low credit score.”

Rather than just dwelling on your past, we like to focus on the present and the business conditions. With Excel Capital Management, there’s no minimum credit score to qualify for an unsecured loan. When determining if your business is right for an unsecured loan, our underwriters analyze a variety of metrics such as big data, historical risk models and trade line distribution to determine its unique growth potential instead of just a credit score.

What requirements does my business need to meet?

Typically, you may have found other lenders can be rather vague in identifying the requirements that you need to meet. We disagree with this model and prefer to be as upfront to small business owners as possible. We support small businesses—after all, they create 64 percent of private sector jobs and mean a lot to our economy. But like any lender, we don’t just hand over money to any business.

Before you qualify for a loan, there are a couple of standards that you must meet. First, your business must have records showing at least $10,000 of monthly gross revenue. Second, your company can’t be a startup—you have to have evidence that you’ve been in business for at least two to three months.

What can I use an unsecured loan for?

Simply put: whatever you want to grow your business. Once you obtain the unsecured business loan, it’s up to you to determine the ways in which you spend the capital to grow your business. It’s best to put the capital to work in ways that will help you increase sales and profits. For example, you could add new equipment, start a new location, bring in more of your best selling inventory, expand your staff, and more.

If you’re looking for some recommendations on how you can spend this capital to increase your business’s growth, we recommend you check out our recent blog post that details the many different strategies for putting new capital to work.

Are unsecured business loans risky?

Since there’s no collateral on your behalf, we as the lender take most of the risk in an unsecured business loan deal. We’re not in the business of giving you a bad deal in order for us to somehow make more money. Instead, we focus on helping you unlock your small business’s growth by obtaining the capital that you need. Therefore, any deals we make are specifically tailored to minimize the risk of a default while still promoting your growth.

Simply put, unsecured business loans are not particularly risky for the borrower. Rather than investing in the past, unsecured business loans let us invest in the future—without holding your personal assets hostage. If you default on your loan, we don’t antagonize you; we help you come up with the capital to fix the problem.

Do banks provide unsecured business loans?

Banks do provide unsecured business loans, but it’s rare. They are looking for very profitable companies that have been in business a long time, since the bank is repaid out of the business’s cash flow. Using a traditional bank comes with a variety of strings attached.

For starters, in many cases you have to pay an upfront application fee just for the banks to process your application. These fees have a wide range in their costs, but often times, you can’t get your money back even if your application is denied.

A second major problem with relying on a bank to provide your unsecured business loan is time. As any smart business owner knows, time is the most important asset for growing a company. Due to a plethora of banking regulations, banks have to go through a large amount of red tape when determining whether or not they should provide you with a small business loan.

This red tape requires you to fill out more detailed applications, regularly update your information, emphasizes your credit score, and, most importantly, can take months until you get any money IF they come through with the loan.

How can I get an unsecured business loan?

Since 82 percent of small businesses fail from running out of money, we thought we’d provide some help. Until recently, obtaining a business loan was a long, cumbersome process that required trails of paperwork and inconvenienced your day-to-day business operations. That’s what we decided to fix. So we created an expedited process to allow small business owners to get through the application process as quickly as possible and get back to focusing on their operations.

Applying for an unsecured business loan has never been easier with Excel Capital Management. All it takes is a tiny bit of time and you can get back to business.

Simply complete our one page application here and submit your last 4 months of business bank statements. You can get an approval decision from us in less than 24 hours. Imagine what the right amount of new capital can do for your business today, providing cash for working capital, to buy new equipment, expand locations, or any other purpose that can help you grow.

So does an Unsecured Loan make sense for your business? If so just click here to get the ball rolling

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