How to Get Approved for a Business Line of Credit
Your business needs cash. Whether you’re just getting off the ground or your company has been going strong for years, you never know when you’ll face financial hardship. Maintaining plenty of working capital can help you avoid these sudden financial hurdles, but for many businesses that aren’t a realistic option. If your working capital is running short, consider getting a business line of credit. Learn whether flexible lines of credit are right for your business today.
Start at the Bank
The most traditional way to receive credit is through a bank or other large lending institution. With banks, you can trust that the credit ready when you need it. Basically, opening a line of credit is similar to a bank loan. You’ll need to demonstrate a history of strong finances before becoming approved. Some lines of credit are unsecured, while most must be secured with a business or personal asset.
Unlike a bank loan, a line of credit is only there when you need it. You won’t have to predict the amount of capital necessary to cover unexpected costs. Instead, you’ll open an account and have a set limit of credit you can access at any time. You’ll only be charged interest on the money actually spent, rather than the credit limit that you may or may not ever reach.
If a bank requires too stringent credit requirements for your business, your next option is an SBA line of credit. Ask your bank or another lending company about an SBA 7(a) loan. This option isn’t technically a line of credit, but the lower interest rates allow you to use it to boost your working capital and avoid a financial crisis in much the same way as a line of credit.
Take on an Investor
Finally, you can always approach an investor to ask about a line of credit for your business. Entrepreneurs and investors can setup a line of credit in much the same way as a bank, or offer a loan that helps you get through any rough patches in your company’s finances. Just like a bank application, you’ll want to show your investor a proven track record, a payment plan, and some future goals. They may ask to secure the line of credit using collateral.
From major corporations to small businesses, discover today how lines of credit can turn your struggling company into a dynamic and responsive business with plenty of working capital for any emergency or investment opportunity.