Although banks have been more open to providing small businesses with funding, banks will only approve funds to creditworthy businesses. These requirements can put a strain on to small business owners as they may not have the assets required and may not be willing to invest their personal assets. Most often banks will check the credit history of small business owners and on past records of generating revenue. Here are 4 steps to getting a small business loan without collateral.
Double-check cash flow projections – Most often if you have a high credit score and good record of revenue generation, you will be offered an unsecured loan with high interest. Before you look for a loan, analyze your cash flow to assess if you will be able to repay your loan on time.
Clean up your credit – To reduce your credit score, you have to reduce your credit utilization ratio it will need to be below 25% to ensure that your credit score is not hurt. Start off by paying off your debt to improve your ratio.
Create a solid business plan – Create a business plan that includes your business purpose, how it makes money, growth strategy, financial statements, cash flow projections and the purpose for the loan. It is also advisable to include a record of your revenue generation for at least a year.
Research lenders – Most lenders advertise that they offer speedy loans, however the time for approval and funding may vary. It is best to prepare for requesting for a bank loan, as the interest rates will be lower.