Unsecured or Line of Credit Business

The only difference between a bank unsecured loan and a bank line of credit is a line of credit is an approved amount, which can be activated during a future time usually by just writing a check. The rate of interest, and the terms are exactly the same for either type of loan. The local banks and their loan personnel usually do not have the financial expertise, or knowledge to approve a loan of this type, thus business finance brokers place most of these loans. These brokers have contracts with large national banks to allow the placement of these loans using previously approved underwriting standards. The common loan amounts are usually $100,000 to $250,000.

The requirements to be approved are fairly simple. Most banks use a combination of personal credit, and a Dunn & Bradstreet PayDex scoring. With score of 660 +, and 65 + respectively. The business type, number of years in business, and the sales volume determines the maximum loan amounts approved. Start up or existing business purchase are not eligible for this type of unsecured or line of credit loans, as the failure rate is too high.

Applicants search for firms that handle these types of loans should be careful not to pay any advance fees based upon a promise to provide a loan, as most of those firms are not credible, and experienced in that type of loan. Just as when you applied for a home mortgage, the broker may request a small deposit to cover the costs of any credit application, to cover their costs in the event that your firm does not qualify.

Once you have been preliminary approved, you should be ready to furnish some of the following types of information:

State Drivers License copy

Verification of banking accounts

IRS personal and business tax returns for last year or longer.

Business license or state incorporation papers.

Additional information upon request.

Signed Application, and Broker’s Loan Agreement.

The signed application should contain all of the pertinent information about you and your business, and the Broker Loan Agreement the cost of the loan, or points. It is not unusual for these loans cost to be from 4% to 7% of the amount of the loan or line of credit maximum, and must be paid upon funding or approval. In the event that the loan is approved, but refused by the applicant, most firms will charge a fee to cover their administrative costs.

Approval time for these loans can be from several days to weeks once the paperwork is presented to the underwriter at the bank. Most banks, since the loan is directly with them, will contact the applicant directly, if there are any additional questions or missing information. The same when the loan is approved, and the rate and terms set.