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How To Select A Lender For Attaining Unsecured Business Credit Lines

Jan 26, 2008
There would be no argument when it comes to the importance of a business owner being prepared and organized when applying for loans or an unsecured business credit line. However, most forget the tedious and necessary process in choosing a lender.

The obvious first choice would be to approach the bank or credit union you currently do business with due to the fact that you already have a relationship with that financial entity. When a lender considers loaning you money, the risk involved is the repayment of said obligation. If on the other hand the bank knows you and your payment history is adequate, this could definitely play in your favor.

Start the process by inquiring with your bank or credit union about the type of loans they offer and the options and restrictions that exist. If you decide not to use this lender, then perhaps consider one that wants your business. This would be the proper time to check the newspapers, yellow pages and research the internet extensively for special or creative financing.

Take the time to understand the different types of funding available to you. Most offer both secured business loans and unsecured business loans or credit lines. One obviously requires you to pledge some type of collateral. This in turns allows you to borrow larger amounts of money at lower interest rates.

An unsecured line of credit is one where no collateral is attached to the loan. But make no mistake. You are still under obligation to make timely payments regardless of whether your loans are collateralized or not. The advantage with the latter is that there are no risks on the assets since they were not pledged as collateral. This is in your favor. Some banks will do this; most will not consider this at all.

It's good to note that lenders who regularly offer small business loans many times make the easier and quicker process. I would suggest that you seriously consider credit unions when selecting a possible banking relationship.

Credit unions are in most cases smaller which in turn may allow you to discuss your lending needs with upper executives that you normally would not have access to in larger banking institutions. But also realize that even if this should be the case and the person you meet with believes in your idea, your job in securing these funds is not yet finished.

Always make sure that you have a backup lender even though you may feel absolutely sure that this lender will give you the credit lines you are seeking. Keep in mind that there are scores of financial alternatives that are available to you if you do the necessary preparation at the very beginning.

A very strong advantage for you and your business would be if this bank or credit union has experience with lending to businesses that are similar or are in the same industry as yours. This lender should be one that you would feel comfortable enough in developing a strong business relationship with and at the same time fostering a mutual appropriate for you and the lender.

Ask good questions when sitting down and discussing your goals and needed funding. How long has this bank been in business? Do they appreciate small businesses and their contribution to the community and how both of you will benefit monetarily. Is the lender more of a commercial lender or a consumer lender. These answers will be pertinent when it comes to making that final banking decision.

Ultimately your decisions will also mirror what aspects of growth you expect in the future. A larger institution may offer numerous banking resources and locations even to the point of national banking. Yet a smaller bank would offer easier communication with various key personnel that may eventually have insurmountable influence in your day-to-day operations.

Now is the time to fill out a formal application for the amount of funds you are requesting. And if for some reason you are declined for your banking request, don't give up. Go and use your backup lender. Above all else, be patient and take the needed time to follow through with your arduous task of locating additional funds for your business.

Whatever amount you receive, by making timely payments, this will undoubtedly make it much easier down the road in securing additional unsecured financing thus making your job in this area more enjoyable and profitable.
About the Author
If you are a new business or established entity or perhaps a real estate investor that is looking for easier access to unsecured business credit lines, then you must visit Floyd Tapia's blog that is mandatory reading in the banking industry. Starting here will educate you and make your credit line requests much easier to locate with assured accessibility. Unsecured Business Credit Lines and Small Business Loans
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