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How to obtain an unsecured business loan with bad credit?

When it comes to obtaining unsecured business loans in Australia, there are several financial institutions and lenders that provide such business finance options to various kinds of businesses and entrepreneurs. An unsecured business loan is a kind of loan for commercial utility purposes that does not require the borrower to provide any security assets or mortgage to avail the loan.

Every lender has some specific criteria and requirements for the approval of loans, especially if in cases of unsecured business loans. Banks and traditional lending agencies are extremely risk-averse and have strict regulations and criteria regarding business loans.

During an emergency, a business that requires fast unsecured business loans has little or no chances to get approved from a bank or conventional lender if they have a bad credit history. A bad credit history reflects that the business or the borrower was not able to pay back the loan amount on time or could not pay back at all. This is a negative mark and serious rejection criteria for almost all banks and financial institutions.

Unsecured business loans do not have any collaterals from the side of the borrower and banks and traditional lenders do not take the risk of losing out the loan amount. These institutes are very orthodox and strict about their loan repayment policies and getting an unsecured business loan approved is very difficult and complicated. Plus, having a bad credit history makes the chances of getting such collateral-free loans approved nil.

A poor credit score will disqualify you for most types of bank business finances because such institutions do not take the risk, and avoid the hassle of retrieving the loan amount of borrowers who have a previous record of loan repayment faults in their record.

How to choose a suitable lending agency for easy unsecured business loans?

Easy unsecured business loans are provided by several lending agencies in Australia, to various small and medium businesses. However, choosing a suitable one requires a comprehensive idea of the market and following a few essential steps to get the optimal deal most suited for your business.

Step 1: Checking the eligibility criteria

Various lending agencies have different eligibility criteria when it comes to business loans. While some agencies provide only secured loans, others provide fast unsecured business loans, bad credit business loans, invoice financing, merchant cash advance, construction finance and various other kinds of business loans. Most businesses look for a few basic details:

  1. Trading history
  2. Credit score
  3. Revenue earned by the business and market position
  4. Sustainability of the business
  5. Business reputation or goodwill
  6. The sustainability of your project
  7. Assets and liabilities

To secure the most suitable unsecured loans for commercial purposes, checking the eligibility criteria is a must.

2. Step 2: Documentation

Unsecured business financing is of various forms and types and requires various types of documents. Some are even low doc or no doc loans that come with several benefits for the borrower. The general list of documents depends upon the amount of the loan, your credit history and a few other influencing factors. Here is a list of the general documents required for unsecured business finance:

For loans of $150k or less

Drivers License and 3-6 months business bank statements.

For loans of $150k to $300k

Drivers License, 12 months bank statements, Interim & audited company financials (Balance sheet, Profit & Loss), Accounts payable & receivables ledger.

Loans less than the amount of $150k

Requires only 6 months bank statement

Step 3: Validity and authenticity of lenders

Checking the authenticity of lenders is an important point to keep in mind, because a lot of fraudulent institutions might be operating around in the market. Proper knowledge and research is essential

Step 4: Interest rates and repayment methods

Unsecured loans for businesses come at varying rates of interest ranging at around 9-10% per annum. This should be taken note of, so that while availing a loan, you do not have to pay an extra amount for the premiums and the total loan amount. Various agencies have different repayment methods and it can stretch from 1-5 years, depending on policies of the lender. Choosing the option most optimal for your business based on your income and expenses is essential.

Step 5: Improving your credit score

Commit to making timely payment of repayment premiums through prudent expense management. Business loans are an important way to secure emergency funding for businesses.

Step 6: Alternative financing options for bad credit business loans

Alternative financing is an excellent way to get fast and easy unsecured business loans for emergency purposes. They provide easy and fast financing for various businesses at low interests and convenient approval criteria and repayment methods. They are an optimal solution for bad credit business loans.

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