Your Checklist For Taking An Unsecured Business Loan

Unsecured business loans enable companies to secure capital without the requirement of providing collateral. This key feature is greatly beneficial for small and startup businesses. But, before choosing an unsecured business loan, you must che­ck on a few details. In this article, let’s look at a useful checklist to streamline your application for an unsecured business loan.

Checklist to take an unsecured business loan

Conducting thorough research when applying for an unsecured business loan is important. Here is the checklist that will help you navigate this financial endeavour.

Check the lender's reputation

Verify the selected lender's credibility when applying for an unsecured business loan. List potential lenders and review their website and address, etc. Apart from this, you must check the lender's market reputation, the services they provide, and the most important thing, which is customer service. You can evaluate online reviews on their website and social media channels or look for industry awards and acknowledgements. Also, by asking service-related questions, you can get a clear picture of the lender.

Compare the available loan amounts

After checking the credibility, the next step is to compare the loan amount several lenders offer. Usually, lenders check your creditworthiness, business turnover, existing liabilities, bank statements, etc., while accessing your unsecured business loan application. Also, lenders may evaluate your marketing strategy, sales channel, and the list of projects accomplished to avoid defaults and decide the loan amount. You must compare several lenders and choose the one that offers a reasonable amount to manage and expand your business, upgrade technology, and hire new people.

Know the interest rates

Once you determine the lender that offers a reasonable amount, it is equally important to ensure the interest rate is low. This rate is de­termined by several factors. These include your credit score, the lender's reviews of your repayme­nt track record, loan purpose, and the re­quested amount. Higher credit scores typically come with better service terms. Conve­rsely, a higher interest rate is charged with a low credit score. Thus, before submission of your application for an unsecure­d business loan, take ample time­ to boost your credit score.

Double-check loan tenor

Repayment tenor is another parameter you must check for an unsecured business loan. If the repayment tenor is flexible, you can choose EMI, which is affordable, and manage your finances without any hassle. For this, a business loan EMI calculator can help, providing an idea of the EMIs so that a borrower finds a suitable tenor. Therefore, you should select a financial institution that offers flexibility in repaying the loan amount.

Application procedure and sanction time

For an unsecured business loan, the documents required are the same for almost all lenders. However, one with straightforward eligibility criteria and simple paperwork is preferable. Apart from this, online loan applications are available from several lenders, reducing the overall sanction time and eliminating the tedious paperwork. So, while applying for an unsecured business loan, check the sanction time and the documentation process for a seamless process. 

Check for any additional/hidden charges

When thinking about getting an unsecured business loan, it's not just about the interest rate. You should also look at additional or hidden costs involved. These include fees for processing your application, charges you might face if you miss a payment, and costs associated with paying off the loan early. It's important to consider all these factors before making a decision.

To sum it up, every business needs capital to operate and grow. Unsecured business loans can be a lifeline, but it's important to remember esse­ntials like the loan sum, interest rate, additional fees, and process period. Choose a lender that fits your needs before deciding to ensure a smooth and successful financial journey for your business.