Unsecured Loans · 2 min read
How to Qualify for an Unsecured Business Loan
How to qualify for an unsecured business loan: time in business, revenue, credit, documents, and ways to strengthen your application.
This guide is part of our Unsecured Business Loans hub.
Without property as collateral, lenders approve unsecured business loans based on the strength of your business and your credit. Here is what they review and how to prepare.
What lenders review
- Time in business: many programs look for at least one to two years.
- Revenue: consistent monthly deposits show you can carry the payment.
- Credit: personal credit for the owner and business credit where available.
- Existing debt: current loans, advances and their payments.
- Industry: some lenders restrict certain industries.
- Cash flow: average daily balance, overdrafts and returned payments on bank statements.
Documents to have ready
- Recent business bank statements, often three to six months
- Business tax returns for larger requests
- Owner identification and ownership details
- Entity documents and EIN
- A list of existing business debts
How to strengthen an application
- Keep business and personal finances in separate accounts.
- Avoid overdrafts in the months before you apply.
- Pay down revolving balances to lower utilization.
- Apply for an amount your revenue clearly supports.
- Explain any one-time dips in revenue up front.
Newer businesses
If your business is young, options may be limited to smaller amounts or require stronger personal credit. Building revenue history and business credit expands your options over time.
Choosing what to apply for
Decide whether you need a revolving line or a lump sum before you apply. See business line of credit vs. term loan.
Related guides
Explore the full hub: Unsecured Business Loans. Other financing: Fix and Flip & Hard Money Loans · DSCR & Long-Term Rental Loans · Commercial Real Estate Loans · Trust Deed Investing.
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Terms, leverage and timelines vary by lender, property and borrower qualifications. This article is general information, not financial, legal or investment advice, and not a commitment to lend.