An unsecured business line of credit is a great option for folks with good credit. You can easily free up money for a myriad of business obstacles including working capital shortages, equipment financing or even to pay employees. There are a variety of companies that specialize in these programs with their own unqiue terms and conditions. Below you will find the general overview for the program as well as pertinent information regarding these lines of credit.
What is an Unsecured Business Line of Credit?
An unsecured business line of credit is simply an agreement between a borrower and a lending institution in which a credit source is extended. The line of credit may take many forms such as credit cards or capital loans, but is usually secured. In this case, the unsecured line of credit will mean that this loan is based on person credit score and guarentee rather than securing the loan on a fixed asset. Credit lines can be tapped at the borrower’s discretion and will accumulate interest, which is how the bank makes money from this financial product.
Typical Approval Times & Features
The approval time will depend on the loan amount, but the mean transaction time is 7 – 14 days. Some of the benefits of the line of credit include:
- No collateral required.
- No financials required in most circumstances
- Start-Up Businesses are ok
- Credit Partners (business partner, spouse, friend, or family member) can be used to qualify also.
Make sure the consultant is FICO® Pro Certified.
The Certified FICO® Professional (FICO Pro) program is a new program designed to recognize those individuals who have a strong understanding of FICO® scores and how the FICO® score impacts both the lender and the consumer. The FICO Pro Certification program is available to mortgage industry professionals as well as business lending companies. In order to receive this certification, students must complete three required online self-study courses. Most companies that have this certification for their consultants will be trusted sources for lending.
General Requirements for a line of credit
- Minimum current FICO® scores of 720+
- Funded many clients with FICO® scores as low as 660, although 720+ is best
- No recent derogatories and no major derogatory items.
- At least 5 years of Credit History is preferred.
Generally, these loans are designed for folks with a great FICO credit score. If you have a credit score under 660- you need not apply. The reason why banks are able to loan this money with no collaterol is because the clients have shown a long history of paying and paying on time. Don’t forget, we are talking about banks lending money so don’t think for a second that they do not calculate risk. If your credit is poor, try looking into our bad credit section for resources.
Please note that Business credit scores will need to be 75 or higher to have a chance of getting an unsecured business line of credit.
How to get the Financing
When looking for an unsecured business line of credit, turn to specialized lending companies. Don’t look to banks that have lengthy loan processes. You want lenders who have experience (8+ years) in this financing niche. They will almost always know what to look for on your behalf and can often tell you if you will get the loan before you even apply.You can easily lose out on a deal if it takes too much time. Like I said, this is an extremely active lending environment, so be wary of loan brokers and try to go direct to the funding source.