As you can imagine, we talk to small business owners a lot. So we understand a great deal about their concerns and misconceptions when it comes to getting business funding. And there are two things in particular that pop up on a regular basis:
#1 You need to be a homeowner
Nope, not true! The confusion here comes from the difference between secured and unsecured loans.
In the past, secured loans from banks were the norm – in order to get approved for a loan, you’d have to “secure” it against an asset that you own. And if your business didn’t have any assets, you’d have to offer your own home as collateral instead.
The loans we provide, however, are unsecured. This means we don’t ask for any collateral in order to approve your request for finance. We base our decision on the strength of your business instead. We do this by looking at your accounts to make sure you can afford the repayments.
To give ourselves extra reassurance, we also ask for what’s called a personal guarantee. A personal guarantee is basically an agreement from you that you’re happy to be personally liable for the loan repayments if your business can’t keep up with them.
We’ve written a guide about how personal guarantees work if you want to learn more.
#2 You have to have a good credit score
Nope again, you don’t need to have a good credit score to be accepted for a loan from us.
When you apply for a Boost Capital loan, we do what’s called a soft search of your credit file. It’s called a soft search because it doesn’t affect your score and it’s not recorded on your file. If you don’t have a great credit score, we don’t just reject your application like some other lenders may do.
We use your credit score as one of many indicators of how well your business is doing and likely it is that we’ll get our money back. If you have a poor credit rating but business is booming, we’re likely to approve your request and give you the funds you need.
If you’ve got more questions about applying for business finance, you might find the answer in our FAQs page.