Regardless of the product or service your company provides, there’s a good chance you’ll be applying for a business loan at some point. Loans can be helpful for paying everyday bills or for financing longer-term projects like company expansions or developing a clever new marketing plan. However, a lot of conventional loans may require you to put up collateral, which can put some business owners in a state of unease and cause you to feel less comfortable entering into the loan agreement. Fortunately, there are ways to get an unsecured loan that won’t require you to put in any sort of collateral pledge if you dig a bit deeper into the issue.
Pay Off Other Loans First
If you already have other ongoing loans that you have not yet paid off, your odds of receiving approval for an unsecured loan are slim to none because your lender will feel uncertain that you’ll be able to manage paying back multiple loans at once. The easiest way to get rid of this uncertainty is to focus on a single loan at a time. Pay off any existing loans you have and then apply for your next one.
Focus on Getting Your Company’s Credit Score Up
Without excellent credit, your chances of getting an unsecured loan or other financing are dramatically reduced. This is because your credit score indicates to lenders how trustworthy you are in handling borrowed money and making all of your payments in full and on time, so the higher your score, the better you look. Focus on getting your business credit score up before you send in your application. Your lender will likely run a credit check at some point during the process, so this is a surefire way to make a solid impression on them.
Prove That Your Business Has Liquidity and Strong Income
It practically goes without saying that without enough cash, you won’t be able to pay back any lender. To convince a lender that you shouldn’t need to put in any assets or deposits, make sure your company has adequate liquidity and can prove regular income streams.
Secured funding is common in the business loan world, but if you’re not comfortable with tying your assets to a specific loan, you can look around for options that don’t require any collateral. Qualifying for these types of loans can be competitive and have higher applicant requirements, but with a little work and some strategic thinking, you can improve your chances of an approval for the funding your company will need.