Funding a business is not an easy feat. Every business owner understands the importance of funds and the efforts they have to make to get access to money. If there is the inadequate funds, the business could come to a standstill and cause trouble. It is best to have an emergency fund set aside for the business but sometimes even that fund is not enough. This is when you need to consider other loan options. One of the most common types of loans is an unsecured loan. The loan does not need you to hypothecate any asset and it offers funds for all types of businesses. If you are keen to apply for unsecured business funding, here is how you can go about it.
1. Identify the Purpose of Borrowing
Before you proceed with any loan application, you need to be aware of the purpose of borrowing and the amount of funds you need. Only when you know where you want to use the funds, you will be able to estimate the amount of funds you need. It helps to have a clear estimate of the amount. This makes the process of negotiation easier and lenders are always looking for borrowers who are prepared and know how and where they will allocate the funds. Never underestimate or overestimate this amount because it could lead to trouble in the long term.
2. Check the eligibility criteria
When you begin to scout the market for lenders, you need to keep in mind that all lenders will not have the same eligibility criteria. You must compare the same online and then make a decision. A lot of lenders require the business to be in existence for a minimum period of three years and it should be profitable. Lenders will also take your credit score into the account.
3. Gather documentation
Since there is no hypothecation of assets in unsecured business funding, it is quicker to get the loan approval. Before you make the application, it is best to gather the documents and have them in place. You will have to provide KYC of the partners, address proof of the business, business registration documents, ITR, bank statements, income statement, and balance sheet, and projected financial statements. If the lenders require any additional information, they will contact you for the same.
4. File the application
You can now proceed with the loan application. Simply fill the online form and submit the necessary documents. Read the terms and conditions of the loan thoroughly before you sign on the dotted line. Your application will be processed and approved within 10 working days and you will have the funds in your account.
It is important to make timely payment of dues in an unsecured business funding. You need to keep in mind that if you default, it could hurt the credit score. With high loan amount and low interest rate, the unsecured loan has become an ideal form of borrowing and will help achieve the business goals.