Unsecured Business Credit

Unsecured business credit is harder to find these days because of the shaky economic times. Are you a small business owner who needs to build a line of credit for your business? Or, do you already have a line but need more? Perhaps you’re concerned your personal credit will be negatively affected – or will keep you from getting the financing you need to build your business?

There’s one thing almost every business advisor agrees on … a small business must have business credit, or it is almost impossible to survive in this dog-eat-dog business environment.

But the pressure is on banks to limit their lending to only the highest grade borrowers. The government is intimately involved in their operations, or trying to be. And banks have had issues with their lending portfolios. As a result, their lending policies may be tough.

That said, there are sources of unsecured credit still available. If you know some “insider” secrets:

• Some banks don’t really care how good your business or ideas are
• Some banks often run you ragged, making you jump through hoop after hoop … so they can reject your loan!
• Owners who have declared personal bankruptcy can get business credit
• Businesses with great sales and income can have their application denied, while businesses on the brink of failure can get their aps approved
• Owners who know how to play the “lending game” do better than those who do not

There are certain business foundations that need to be in place to get your credit line or loan approved. There are two primary documents required:

Business Plan - You need to have a GOOD, operating and current business plan. You can write this yourself, there are myriads of software programs to help you. You can also hire someone to do this, but, if you do, really check out his or her credentials and success in writing business plans for others.

Loan Request - Your financing institution wants to know, in minute detail, why they should loan you money for your existing or planned business. At its simplest, answer Who, What, Where, Why, and How.

Make sure you write this, however, in a way that an outside third-party can understand. Write at a very simplistic level, say at a fifth grade level. Those reading your plan are probably seeing a whole lot of them, and aren’t paying a whole lot of attention. You will probably only have one chance to impress them, so don’t be lazy in this phase. Imagine that you’re the recipient who knows very little about your business or industry. Make sure you would understand your pitch.

Lending Options - Despite tough times, there are still a wide range of financing options for the small business owner. Some are more traditional, like banks and lending institutions. There are venture capitalists, hard money lenders, and bridge loan investors.

One thing to keep in mind. When looking for business financing in today’s market, you may not get exactly the rates and terms you want. It helps to be realistic, do your due diligence about what to expect before making any applications. This helps when you get financing offers, so you can tell if the costs are reasonable. Sometimes you have to take what you can get. Only you can decide. 
 
The good news is that there are still reasonable sources of unsecured business credit.