No/Low Doc Unsecured Business Loans: Apply, Approval Guide

9 min read

If you’re a small business owner wanting to learn how to get a no doc/low doc and unsecured loan separate from your personal credit, we can teach you how to do it while spending a lot less energy. For any business to qualify for credit, the right procedures and processes must be followed. As the business owner, you need to ensure you have the right information.

With a little hard work and 30 to 90 days of properly monitoring and boosting your credit score, you could be able to seek out an unsecured loan up to $75,000. If you’ve already been denied by the bank and need cash fast, then you might want to an try alternative lender or look into second applications,

Securement Process

How can you secure business credit in this market? The process requires you to start by preparing your business to convince the bank to lend to you, and you should also know the right banks to seek credit. Where possible, try to focus on the local community credit unions and banks.

Loan Limits

In order to determine how much credit you can get, always consider the number of sales you are making in your business. If you are just starting and have no sales just yet, you could quickly receive a smaller limit between $5,000 and $15,000, but with some effort, you could also get a $50,000 no-doc loan.

Alternatively, if your company is established and has been in operation for a while, then your sales figures and revenue can be used to increase your loan limits. They will probably want to see these figures over the last two years or more with positive tax returns.

Community Banks

Some national banks offer great programs that are no/doc, but it’s always easy to get it from the local community banks. The main reason is that the national lenders will require you to meet all of their requirements, which is not always easy.

The local community credit unions and banks, on the other hand, will take the common sense approach with lending and will have better customer service with a personal touch when assessing qualifications.

Establish Personal Relations

It is, however, pretty important for you to have a good relationship with your lender. This would probably be the Vice President of Lending. It will make it easy for you to discuss some ball-pack figures before you apply for the credit.

Always have a POC or a point of contact with whom you can speak freely and openly.

A good lender will want to know lots of information about your company before you can submit your application. They will also tell you what you need to do to get approved for the credit and give you tips on what you can filter out of your application.

Before Applying

These certain steps need to be taken before applying to ensure you have a much better chance of approval.

Good Standing Certificates

The second step towards getting your business credit is to ensure that your company complies with local state and county requirements. Ensure that your company has good standing when it comes to the secretary of the county or the local county and town clerk. A good idea would be to get your standing certificate from your state’s revenue division to confirm your good standing.

DUNS Number

Before you can set this line of credit, which is also known as NET 30 credit, or Vendor Credit, please ensure that you have a credit profile for your business with Dun and Bradstreet. The first step is to get your own DUNS Number.

After that, ensure that everyone you do business with reports to the business credit bureaus that you are paying them on time. This will help you have a credit report before applying for the bigger credit lines such as loans and lines of credit.

Net 30 Credit Boosts

Additionally, you should ensure that your company has a sufficient credit history from the business credit bureaus. This is the same concept you have to go through for personal credit as well. If you do not have a personal history, it’s hard to get a loan. The same applies to business loans.

You are probably asking yourself how you can get some business credit if you are required to have some credit history first. Well, there is a process to get that as well. This involves setting up small lines of credit with easy approval that will report a payment history on your behalf to the bureaus, which are Equifax, Dun & Bradstreet, and Experian.

Positive Cash Flow

Once the foundation is laid out and your credit profile is active with the bureaus, then you should analyze what you are bringing to the table as a business. Ideally, you are required to have some tax returns that have good revenues.

Good returns are a definitive variable in loans limits, but what you should be thinking about is – positive cash flow.

Good Personal Credit

The person applying for the business credit, either the CFO, CEO, or Credit Partner, should also have good personal credit records and have a good FICO score. Assuming this is the case you have for your company, it will be very easy for you to move on to the next step.

A good FICO score can help you attain an unsecured business credit line without any pledged collateral.

In case you do not have profitable assets, or tax returns, or even a good credit report, then you may be required to take additional steps to build up your credit or look towards an alternative lender who is willing to take on more risk.

Where to Apply

Now, that you know how to get it, the next step is where to get business credit, and you should always look at the local credit unions and community banks first.

Local Banks

The simplest and best technique is to call around ten local banks near you. Do not consider national banks. The reason behind this is complex.

To put it simply, the local business banks tend to be competitive when offering loans to small businesses, and you are most likely to get a very personalized approach and excellent customer experience.

You could start by googling the nearby banks and then call them, try all banks, even those that you may haven’t heard about before. Trust me; it doesn’t matter where you are; there are bound to be around 50 – 100 community banks within the state you live in, and they are always eager to hear from new customers.

SB Campaigns

You could also contact banks that advertise exclusively to small businesses. These probably have flyers or billboards that you can see when driving or walking around.

If the bank is spending money advertising on a billboard or a newspaper, they probably are willing to lend your business the money.

Initial Contact

After you have created a list of banks you wish to speak with, start calling them one by one and ask them the following questions;

  • Do they have business checking accounts?
  • Are they offering business credit such as loans, lines of credit, or credit cards?
  • Is there someone you can ask about business credit requirements, such as the Point of Contact?

With these questions, you will have a narrowed-down list of the banks to visit. These are the banks that will offer you what you need and they also have a well-established process with the right people to speak with. At this stage, you will want to tell them who you are and probably set up a time for a meeting.

First Meetings

At this meeting, you are not going to apply for credit. What you want is to understand the bank and have them know you as well. Sometimes the bank will not tell you anything about their underwriting requirements. These are the banks you should not work with.

Underwriting Tips

Some POCs, however, tend to be very open about their requirements and underwriting guidelines, which they will inform you.

Find the bank contact that is willing to share some tips on what it will take for you to get approved as well.

Approval Preparations

Ensure to let the bank know that you wish to have your business prepared well before applying. You do not want to just submit an application and then sit back and wait for a rejection. Find a bank or someone with who you can have a relationship with and one that can offer you advice on what you should do to receive approval on your application.

Approval Guidelines

Most often, the banker will tell you point-blank that; to get approved for around $50,000, you may need to have at least $400,000 in sales. They will also tell you that the loan is a low/doc or no/doc below the $50,000 mark. Please note that this is a simple scenario and the terms will probably be different, depending on the bank.

Quite often, however, they will lend you around 10 to 15% of your gross sales. Yes, sales revenues, not profit.

Time to Apply

Now, at this point, you have probably prepared your company and have already found a lender. It is now time for you to make the application. If the banker is a good one, you will receive help with the application, and once it has gone to the next step, they will provide some good words on your behalf that will go a long way towards your approval.

Second Applications

In case you are not approved the first time around, do not be discouraged. In some situations, being denied can just be another part of the process.

Denial Reversals

According to analysis, about 20% of declines are normally overturned. Take your time and learn the reasons why you’ve been denied and fix any issues accordingly. Later on, you can apply again without repeating the previous mistakes.

Building Rapport

One advantage of working with the local banks is that when you have a good rapport with the lender, then he or she can then personally speak on your behalf to the CEO or the lending committee of the bank about your application.

This is probably not likely to happen when using a big national bank. Often, they have pull when it comes to the underwriters and can get your application approved or give you another offer.

Bottom Line

This process of applying and getting a business credit can require a little bit of work, but just try to focus on what is on the other side, which is money in the bank!

When you receive your business credit, you can use it to improve your operations dramatically, for accounts receivables, to increase marketing, or anything else which translates to an increase in profits.