When a business needs a working capital loan, the ideal timeline is usually not “two months from now.” More often it’s “yesterday.”

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But lenders tend to be less urgent in their actions, especially when we’re talking about unsecured working capital loans. They’re depending on the business to make their payments. They want to do their homework. 

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So what if you need business credit approval — for working capital, real estate investor funding, anything  — but the lender doesn’t seem to be in any hurry? Will it drag on for days? Weeks? Months?

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Munoz Ghezlan Capital helps real estate investors, small business owners, and other entrepreneurs qualify for up to $500,000 in unsecured funding in a matter of days — even for companies that thought it was hopeless or knew nothing about business credit approval. From our experience in the field, here is what it takes to quickly qualify for unsecured working capital loans.

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What Unsecured Working Capital Loans Are, and How They Work

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Unsecured working capital loans are a type of business loan. The “unsecured” part means that they attach no assets as collateral to secure repayment. The only security for the loan is the personal guarantee of the business and any other guarantors. In the event of default, the lender can sue the guarantors for repayment, but they can’t automatically seize real estate, bank account balances, equipment, intellectual property, or any other assets held by the business. 

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The “working capital” part means the purpose of the loan is to provide the business working capital, either for a one-time capital expenditure or expansion campaign; or to cover day-to-day working costs for businesses that experience uncertain or seasonally depressed cash flow.

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Working capital loans can take the form of lump sum loans with fixed terms and set monthly payments, or Lines of credit with revolving credit balances, variable interest rates, and annual renewal.

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Why Fast Approval Matters for Small Businesses and Real Estate Investors

Fast approval matters in business because deals don’t wait and emergencies happen. Any number of circumstances might arise where the prosperity of the business, or even its very survival, might depend on a fast cash infusion. Examples include:

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• An important piece of equipment breaks and must be replaced.
• A major client is late paying an invoice and bills are due.
• A payroll period arrives early.
• Sales are high and inventory runs out before the merchant account distributions land.
• A bulk discount becomes available from a supplier for a limited time.
• A new client wants a large delivery.
• A distressed real estate deal arises off-market or at auction, but gap funding is needed until permanent financing can be secured to secure deposits, appraisals, or inspections.
• You can secure a better deal from a contractor or supplier with early payment.
• A major marketing opportunity arises and you need capital to fund it. 

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Qualifications Lenders are Looking For

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We now understand what unsecured working capital loans are and why we might need one quickly; now let’s examine what the lenders who make those loans are looking for. A business owner in search of fast funding will have the best luck by checking as many of these boxes as possible.

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• Monthly Revenue. Lenders base their risk models on the past monthly revenue of a business. Many working capital lenders look for at least $10k-$25k in consistent monthly revenue; some lenders have lower or higher requirements.

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• Time in Business. Lenders see companies as better bets if they have been in business for a while. You might encounter “time in business” requirements of 6 months, one year, or two years, though certain lenders’ requirements may be higher or lower.

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• Health of Bank Account. Lenders want to see that your bank account records have few or no overdrafts, non-sufficient funds (NSF) instances, or negative days while maintaining a sufficient daily balance.

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• Credit Score. Unsecured lenders rely less on credit scores and more on cash flow reports, but they do look at the credit ratings of the business and any personal guarantors. They usually want to see a credit score in the 600s or at least high 500s.

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• Cash Flow. The profitability of the business — as reported on profit-and-loss statements — is less important for unsecured working capital loans than the raw cash flow of the business.

Documents You Need for Fast Approval

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When it comes to loan approval, it’s all about what you can prove — in other words, “documentation, documentation, documentation.” Here are the documents that will almost certainly be relevant to your loan approval. Omission of any of these documents could result in delays or even denial. On the other hand, having all of them could cut approval time from days to hours.

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• Driver’s license, passport, or other valid government ID.
• Voided check from the business checking account.
• Most recent bank account statements, usually 3-6 months’ worth.
• Possibly your most recent business tax return.
• Personal FICO score and credit pull.
• Possibly profit-and-loss statements.
• Business plans, rehab budgets, contractor bids, deal summaries, or other estimates relating to the use of the working capital requested. 

How to Improve Your Business Credit Approval Odds Quickly

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If you don’t have an immediate need for an unsecured working capital loan but suspect you might need one in the future, here are some strategies you can execute now to strengthen your odds of approval in the future. Some of these even help short-term.

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• Stabilize Bank Account Balances. Maintain a minimum balance on your business bank accounts to show stability of cash reserves.

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• Eliminate or Reduce NSFs Before Applying. See if you can get your bank to eliminate non-sufficient fund flags from your past history, or at least make an extra effort to incur no more.

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• Pay Down Credit Card Utilization. If your credit card or line of credit balances are higher than 50%, try to pay them down to at least 30% with no more than 50% of the credit limit balance on any one card or line. It can even help to open up a new credit line or card and transfer balances to reduce the balance on any one account.

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• Ensure Business Address, EIN, & Licensing Are Consistent Across Databases. Wherever your business is listed, make sure everything matches. Discrepancies can lead to delays.

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• Create Trade Lines Through Vendors Who Report. Not all vendors report to credit bureaus, but some do. The more payment history you establish with these reporting vendors, the more creditworthy your business will look. Examples of vendors that report to business credit bureaus include Uline, Grainger, Quill, and Summa Office Supplies. If you need these products and services anyway, you might as well boost your approval odds while acquiring them.

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• Separate Personal and Business Transactions. Make sure you are not using personal accounts for business transactions. This can muddy the financial records and complicate lenders’ underwriting.

Hacks to Qualify for Unsecured Working Capital Loans

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Certain little-known strategies can help slug the odds of approval in your favor. Here are some tactics to consider if they are open to you.

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• Use a High-Revenue Bank Account When Possible. Some companies split deposits between multiple bank accounts. For the purpose of approval for unsecured working capital loans, you would be better off concentrating your revenue into one large account with a higher balance.

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• Season Incoming Funds for 90 Days. Try to maintain a consistent minimum balance in your account for at least 60 days, preferably 90 days. This is called “seasoning.” It’s used to prove that any recent influxes of cash are actual revenue and not borrowed funds.

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• Use Fintech Lenders Instead of Banks. Fintech lenders (that is, digital businesses that operate in the new landscape of online finance) often offer quick approval and funding, sometimes same-day. But beware of factor rates, short loan terms, and daily draws (explained in detail below).

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• Consider Split-Processing Solutions for High Credit Card Volume. If your business processes credit card transactions, consider splitting the processing between different processors. If you process all your transactions through one processor, this creates a greater risk of chargebacks, fraud, refunds, and industry risk.

Fast Funding Options That Don’t Require Collateral

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Working capital loans are not the only option for unsecured debt that can fund quickly. If you need fast access to working capital, the following may be worth considering.

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• Revenue-Based Financing (RBF). Revenue-based financing is a type of business loan where instead of collecting a fixed monthly payment, the lender collects a percentage of the monthly revenue up to a certain factor rate (explained below). Watch out — these loans can put a lot of pressure on cash flow and have a high cost of capital.

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• Merchant Cash Advances (MCAs). Merchant cash advances are a loan against the unreleased balance in your merchant account. These loans tend to be short-term with high interest rates, making the cost of capital high.

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• Short-Term Unsecured Term Loans. Short-term unsecured loans, especially from online lenders, can fund very quickly — sometimes same-day. However, some of these loans require weekly or even daily ACH draws for repayment, which can also put pressure on cash flow and create a high cost of capital. 

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• Business Credit Cards With High Instant Limits. Some business credit cards will arrive quickly and have a high limit. However, the interest rates tend to be the highest of all and require the most fiscal discipline within the company culture.

Industry-Specific Tips — Real Estate Investor Funding

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Munoz Ghezlan Capital has helped hundreds of real estate investors secure unsecured working capital loans. For entrepreneurs in real estate, here’s what we advise in terms of using these types of loans for real estate investment:

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• Use Unsecured Working Capital for “Gap Funding.” Most mortgages prohibit the use of borrowed funds for down payments, but you can use unsecured working capital loans for “gap funding” to pay costs like deposits, inspection fees, and appraisal fees that accrue before you can secure more permanent financing.

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• Pay Contractors & Materials While Waiting on DSCR or Hard Money. If you want to get a head start on accumulating materials or paying contractors, unsecured working capital loans can help you hit the ground running on a rehab or fix-and-flip deal.

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• Use Unsecured Lines to Speed Up Closing Timelines. 

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• Avoid “Loan Stacking” Without a Repayment Plan. If you have too many loans, either mortgage lenders or working capital lenders may be reluctant to approve you or at least subject you to more time-consuming scrutiny. 

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• Keep Your Project Budget Clear. Be prepared with detailed business plans for your rehab, renovation, or value-add play to help align the lender with your vision.

Red Flags That Slow Down or Kill an Application

When it comes to getting approved for a business loan, knowing what not to do can be more important than knowing what to do. The following are major red flags for lenders — red flags that can slow down your approval or even scuttle the loan entirely.

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• Negative Bank Days. A “negative bank day” is any day where a bank account ends with a negative balance. Do whatever you need to do to avoid letting your bank balance drop below zero before the close of the business day.

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• Large Unexplained Cash Transfers. Large cash transfers out of, or even into, your bank account look suspicious. Even if they represent a sudden windfall of income, they may cause your prospective lender to infer that  you have taken out other loans in the recent past. Large transfers out of your bank account, by contract, make the lender wonder if more big outflows might be on the horizon, threatening your ability to make your payments.

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• Mixed Personal/Business Bank Accounts. Lenders strongly prefer business and personal expenses to be kept separate. To commingle personal and business funds leads the lender to suspect that revenue is not sufficient to cover costs.

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• Recent Overdrafts. If you have overdrawn your account recently, it sets off the lender’s radar for cash flow problems.

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• Unpaid Tax Liens. If you have liens on your property due to unpaid taxes, lenders will suspect that paying off these liens will take priority over the service on the debt you are asking them for.

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• Suspicious Or Missing Documentation. If required or at least customary documents are missing, lenders will wonder what you are hiding or if you are too disorganized to keep clean records.

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• Large Recent Deposits Not Tied To Revenue. If any large recent deposits cannot be traced to an influx of revenue, the lender will assume it to be proceeds from an undisclosed loan.

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• Shifting Revenue From Account To Account. If the cash proceeds from revenue income has been moved frequently between bank accounts, it looks like a company is trying to manipulate bank statements to hide poor cash flow.

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• Heavy Recent Debt To Other Lenders. The more debt a company holds, the greater risk the company appears to be to a lender. Heavy recent borrowing may signal to the lender that the company is in trouble and possibly a bad bet.

How to Avoid High-Cost Capital & Predatory Lenders

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The promise of fast cash can be tempting, especially for a company in need. However, many predatory loan products exist — not just for individuals in need, but for businesses. Even if not strictly predatory, companies need to be aware of when the high cost of capital does not justify the short-term satisfaction of a business need.

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• How to compare factor rates vs. APR. Some short-term loans use “factor rates” instead of APR. An APR (annual percentage rate) is the standard practice of charging interest on a loan. “Factor rates,” by contracts, require you to repay a percentage of the balance as a cost of borrowing.

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 For example, a 1.25x factor means that you have to pay back 25% more of the balance of the loan, regardless of how long you hold it. Some factor rates could be 1.5x, 2x, or even higher. Use an APR calculator to find out the actual cost of borrowing — you will usually find that the APR loan is a better deal, especially over longer terms.

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• Watch out for daily ACH draws that exceed 15–20% of revenue. Some short-term unsecured working capital loans require you to agree to daily ACH draws instead of monthly payments. If these daily ACH fees exceed 15-20% of revenue, they pose a serious risk to your liquidity. 

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• Verify lender licenses. Lenders must be licensed to legally operate in nearly every jurisdiction. Trust, but verify — make sure your lenders are legally authorized to lend. Otherwise, you increase the risk of dealing with a predatory lender.

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• Read fine print: UCC liens, confessions of judgment, personal guarantees. While some loans may technically be “unsecured,” instruments like Uniform Commercial Code (UCC) liens empower the lender to go after assets not named as collateral in the loan. 

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A “confession of judgment” empowers the lender to pre-emptively enter a judgment against a borrower in default without notice and even without a lawsuit. Absent that, a personal guarantee puts the borrower’s personal assets at risk in a default lawsuit.

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• Use brokers selectively—avoid those who shop your file without permission. Some brokers take actions on your behalf that you didn’t authorize and may even bind you to credit pulls or other agreements. Choose your broker judiciously.

How Long It Actually Takes to Get Approved & Funded

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So how long does it take for you to actually get your money? It’s the $500,000 question for businesses in a cash crunch. Here’s what to expect for unsecured working capital loans.

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• Fastest: 2–4 hours. This is rare, and many lenders who offer these turnaround times also lock you into high costs of borrowing.

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• Normal: 24–48 hours. Online lenders often offer these kinds of turnaround times if documents are missing. Beware of high costs of borrowing.

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• Slow end: 3–5 days if documents are missing or for better terms. Online loans may take this long if many documents are missing. Other lenders offer this kind of turnaround time if they have slower underwriting processes but offer a lower cost of borrowing.

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• Slowest: 5-10 days if documents are missing and terms are good. Longer-term loans that have low cost of borrowing tend to have longer turnaround times, especially if documents are missing.

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Bottom Line

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Running short on cash can kill a business, but quick access to capital can turn it into a Phoenix from the ashes. If your business doesn’t need working capital now, you can take steps to make it easier for the day when you do need it. Avoid negative days and overdrafts, choose vendors that report to credit bureaus, and keep clean high bank accounts, and you will find the process much easier.

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If you do need quick capital, make sure you have a clear business plan, your documents in order, and a clear understanding of the cost of capital to get the best loan for your business needs.

‍Munoz Ghezlan Capital built its reputation from securing small businesses, real estate investors, and entrepreneurs up to $500,000 in working capital with up to 7-year repayment terms, monthly payments, and excellent rates — even to companies that didn’t think it was possible. If you are considering an unsecured working capital loan, either now or in the future, start the conversation with us now.