Landing Unsecured Business Lines of Credit
When it comes to financing a growing business, timing can be as important as any other factor. If you suddenly find yourself needing a boost in funds, waiting for a bank loan to process might not be an option. This is why business lines of credit are vital to so many companies. Having an unsecured line that isn’t tied to any of your personal or business assets will provide money when it’s needed, without turning you and your company into a slave to the bank. In order to land a good credit line, you’ll need to take a few steps to make sure the bank sees you as an ideal candidate.
Naturally, it’s easier to get a secured line of credit since you’re required to offer up some form of collateral. It’s possible that you’ll want to start there in order to build your credit score and become eligible for an unsecured line, but obtaining credit through a guarantee can be risky if you aren’t clear on the terms and how you’ll manage repayment. Registering with a business credit agency is free and can help you figure out your standing and how much money might be made available once you apply.
Before you can secure any business lines of credit, unsecured or otherwise, you’ll need to have your personal finances in order. If you’re business is getting by because you took out a second mortgage, blew your savings and maxed out a few credit cards, banks aren’t going to view you as a prime lending target. Both your personal and business economics should be in order before you consider applying.
Once your personal debt and business earnings are in order, you still need to have a good proposal to be considered. Since these business lines of credit operate like credit cards but with much larger available funds, the bank has to feel ensured that your company can generate the revenue to cover your payments. Showing tax returns, future business plans and steady collections can all help to earn the trust of the bank. These lending practices are competitive and a credit score alone won’t secure you a $50,000 ongoing line of credit.
Business lines of credit are extremely useful for a growing business in need of quick and sporadic access to capital. If you’re looking to create a line for your company, make sure your finances are in order and spending plan is clear and succinct. If you want a bank to give you their money, you’ll need to give them good reasons as to why.