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The amount for which firms that specialize in unsecured lines of credit can approve applicants varies. Smaller firms may offer as much as $100,000, while larger firms can offer $1 million or more.
The basic requirements for an unsecured line of credit typically are a credit score of 680 or greater and at least two years in business. Full documentation is usually required for maximum loan amounts. Many firms will approve applicants with less than two years in business for as much $350,000, sometimes with no documentation.
The firm also keeps abreast of the credit requirements and underwriting guidelines of the most-prominent banks that offer unsecured lines of credit. The applicant's submission package is then tailored to meet these specific requirements, which thereby enhances the chance of success.
In essence, the applicant is presented as the "perfect" applicant because everything in that borrower's file adheres to the bank's standards.
Doing your part
When brokers work with a specialist firm, their initial work simply involves collecting the required application information from the client and submitting it to the firm. As the process continues, the broker may get additional documents from the applicant.
Compared to the mortgage-application process, there is much less paperwork involved and fewer individual entities in the mix. There is no appraiser, no title company and no selection of potential lenders to compare. Brokers only need to deal with one company; it does the rest.
Although there is less work for brokers with this product, the commissions they receive when these lines are approved essentially equal the commissions paid on a mortgage transactions.
For brokers who are looking for ways to supplement their income in a time when fewer products are available for their clients, unsecured lines of credit can offer them and their clients more security.
Milton Franklin is a founder and managing member of Nationwide Equipment Leasing LLC, an equipment-leasing company that also offers unsecured business lines of credit. A graduate of Wharton Business School, Franklin has 24 years' financial-services experience. Reach him at (800) 395-4908 or Milton@neleasing.com. Go to www.neleasing.com/application-form.cfm and request unsecured-line-of-credit information to receive a free copy of Franklin's special report "The Solution: Unsecured Line of Credit."
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