5 Things You Need To Get A Fast Unsecured Business Loan
Traditional lenders like banks rarely offer unsecured business loans. However, online lenders can fund loans with no collateral requirements in as little as 24 hours. To make the best decision when applying for an unsecured business loan you should consider why you need the funds, overall costs, minimum qualifications, documentation requirements, and the application process. An unsecured business loan from BitX is a great option for short-term working capital. It offers repayment terms of up to Five years, rates starting at 9%, and loans up to $500,000. Get prequalified in minutes with funding as soon as 24 hours after approval.
There are five steps you should follow when considering how to get unsecured business loans, which include identifying the reason for the loan, considering the costs and terms related to the loan, verifying the ability to meet the minimum requirements for the loan, gathering all necessary documentation, and then applying for the loan.
1. Identify When and Why You Need Funding
Unsecured business loans are best to finance short-term capital needs because their repayment terms are typically limited to two years and require daily or weekly payments. The best unsecured business loans also allow you to get access to funds in one to three days but may not be the best option for every business. To make a well-informed decision about when to use an unsecured business loan, it is important to understand exactly what it is and when it is the best option for your business. Some small business loans may have longer funding times or higher requirements but can provide better overall rates for your business.
What an Unsecured Business Loan Is
Typically, traditional bank loans require collateral in the form of real estate, equipment, or other business assets to get approved. With unsecured business loans, lenders do not require collateral relying instead on a Uniform Commercial Code (UCC) lien and a personal guarantee. This means approval for these loans is based solely on your credit score and business performance. Although you are not pledging any collateral, the personal guarantee enables lenders to go after your personal assets in the event of default. In addition to a personal guarantee, the UCC lien covers all business assets, including accounts receivables and inventory. You should ensure that you understand the risks involved in getting an unsecured business loan before applying.
When an Unsecured Business Loan Is Right
An unsecured business loan is typically used to cover short-term financing needs if you have poor credit, lack collateral, or are a new business. However, you need to have a good understanding of how quickly you can repay the loan because most unsecured options need to be repaid in less than 36 months. In addition to the short repayment term, you will also have to make frequent payments. Most lenders require daily or weekly payments that are often taken directly out of your business bank account. It’s important to ensure that your business has sufficient cash flow to repay the loan, without going into the negative. Combined with the high costs ranging from 9% to 100%+ annual percentage rate (APR) for an unsecured loan, the short repayment terms can have a large impact on your cash flows. If you have assets available to pledge as collateral like equity in real estate, it’s very unlikely that you will qualify for an unsecured loan to finance equipment or real estate. Additionally, lenders that partner with the Small Business Administration (SBA) are required to get as much collateral as possible and will typically not consider an unsecured loan if there is any collateral available.
When an Alternative to an Unsecured Business Loan Is Better
You should consider an alternative to an unsecured business loan if you have larger funding needs or need longer repayment terms. This will save you money in the long run due to the lower interest rates and allow you to manage your cash flow better. Additionally, if you can wait 30-90 days to get funded consider an SBA 7(a) loan for the best rates and higher loan limits. However, if you need access to capital quickly or are unable to qualify for a traditional alternative BitX Funding offers the best-unsecured business loan. You can apply in just 10 minutes online for up to $500,000 with terms as long as 60 months. Approval decisions are made the same day, and you can have access to your funds in just 24 hours.
2. Consider the Unsecured Business Loan Costs & Terms
The costs of an unsecured loan will typically range from 9.99% to 100%+ APR, which is higher than most traditional secured loans. Your APR will vary depending on the origination fee, interest rate charged, and the total length of repayment for your loan. Although an unsecured loan is more expensive than a traditional loan, it is typically lower than a merchant cash advance, which can exceed 200% APR. The typical costs and terms of an unsecured business loan are:
- Expected APR: 9.99% to 100%+ APR; your rates will vary depending on the type of financing you use, your personal credit score, and your business fundamentals like sales, growth, and customer retention
- Repayment term: One month to five years
- Repayment schedule: Daily, weekly, or monthly
- Loan amount: $10,000 to $500,000
A BitX unsecured business loan is among the best online options available to borrowers without collateral. Their overall APR ranges from 9.99% to 100%, they offer terms up to three years and daily or weekly payments. In addition to this BitX also offers a wide range of loan amounts, up to $500,000.
Comparing Costs of Unsecured Business Loans to Alternatives
Unsecured business loans typically carry higher maximum costs than their secured traditional counterparts and other alternatives like business credit cards, or a line of credit, and invoice factoring. Typically, the daily interest cost of a $10,000 unsecured term loan ranges from $3 ― which is similar to most loans ― to $38, which is slightly higher than most alternatives except merchant cash advances. The high upper limit of the term loan APR is due to the longer repayment terms over alternatives like invoice factoring. When receiving the entire loan amount up front, the lender is typically taking a greater risk, especially if the loan isn’t backed by collateral. An example of a collateralized loan is an SBA loan, which typically costs as little as $1 to $4 in interest per day on a $10,000 loan.
3. Identify if You Meet the Minimum Qualifications
The minimum qualifications for an unsecured business loan will vary depending on the kind of financing you are getting. Typically, more expensive financing has lower qualifications and vice versa. These requirements include minimum personal credit scores of 600 and higher, time in business of at least one year, annual revenue of $100,000 or more, personal guarantees and blanket UCC filings. The typical minimum qualifications and requirements for an unsecured business loan are:
- Credit score: 600 and higher (check your credit score)
- Minimum annual revenue: $100,000 or more
- Time in business: At least one year
- Collateral & personal guarantee: Typically, a blanket UCC filing and personal guarantee are required for the loan. This gives the lender the right to go after your business and personal assets in the event of default. Furthermore, it may also restrict you to working with a single lender because each will want to have the first claim in such an event.
Typically, loans that don’t rely on credit card repayment or outstanding invoices will have a high credit score requirement. However, BitX Funding 600-plus score requirement makes it very accessible. You can apply online in 10 minutes for up to $500,000 with BitX and get funded in as little as 24 hours.
4. Gather the Required Documentation
With traditional lenders, you would typically need extensive documentation including, business plans, tax returns, and financial statements to get approved for a loan. This is in addition to multiple trips to the bank, revisions, and prolonged procedures. With an unsecured business loan provider like BitX, documentation requirements are minimal and can be done in a few minutes. The documentation requirements for an unsecured business loan with an online marketplace like BitX are:
- Employer information number (EIN) or taxpayer identification number (TIN) of your business: You will need to provide your EIN or TIN as part of your documentation
- Social Security numbers of the owners: For the soft personal credit check, and personal guarantee your social security will also be required
- Estimated annual gross revenue: You will be asked to estimate your annual gross revenue for the business
- Bank statements or connection to your bank account: You can verify your business revenue by connecting your bank account, which is preferred by most online lenders; as a substitute, you may also be able to submit bank statements to determine your eligibility
The first three requirements are simple to have in place as you typically need this information frequently and should have it available. Where BitX excels is the last requirement just printing, scanning, faxing, or e-mailing your bank statements.
5. Apply for Your Unsecured Business Loan
Applying online for an unsecured business loan will typically take about 20 minutes or less. It can be done even more quickly if you have documents and information prepared. Compared to a traditional lender that takes weeks or months to get funded, an online lender can have your funds available in as little as 24 hours. With up to $500,000 available in financing as soon as the next day, you can fund almost any working capital need with BitX. Interest rates start at 9% with terms up to three years, which makes filling out a 10-minute online application an easy final step to getting an unsecured business loan.
|Start Up Line of Credit||Short Term Loans||Long Term Loans||Business Lines of Credit|
|BitX Funding start-up financing program connects entrepreneurs and business owners with $25,000 – $150,000+ in unsecured business lines of credit. This program can provide you with funding in as little as 10 days and is typically offered with 0% interest financing for the first 6-18 months.||Designed to help meet short-term needs, such as unexpected events, or to take advantage of a great deal. Typically, most small business owners qualify.||BitX Funding offers true long-term business loans with automatic monthly payments. If you are looking to Fund larger projects that pay back over a longer term with rates as low as 5.49% this option may be right for you?||Business lines of credit allow you to draw funds whenever you need. Funds will be deposited directly into your bank account. Repay via automated weekly debits over six months. Your available balance replenishes as payments clear. Lines of credit can go as high as $100,000 with interest rates averaging around 13%.|
BitX Funding is the online marketplace for small business owners looking to fund a project. We specialize in connecting small business owners with lenders who will compete for your business. We believe small business owners drive the economy and we are passionate about helping your company reach its full potential.
You can reach a loan specialist by toll-free at 1-800-824-2407, or email at firstname.lastname@example.org or applying online here and we can guide you on which loan is the best fit for your business.