How to Get Business Lines of Credit
A business line of credit is a convenient and flexible source of financing for a small business. It may serve as an extra source of funds to cater for unexpected expenses and cover cash flow insufficiencies. If you have chosen a business line of credit as the ideal financing solution for your business, you may be pondering over how to obtain it. Here is a guideline you may consider following to get a business line of credit.
Check if Your Business Qualifies
By first determining if your business is eligible to receive lines of credit, you save on time and effort in case you fail to meet the minimum requirements. A variety of lines of credit exist, each with their unique condition exist. However, there are a few requirements that are shared by all. You should have an excellent credit score as it is an indication of how trustworthy you are with repaying loans. Your business should also have been operational for two years for it to qualify. Additionally, your annual business revenue should meet a certain threshold for lenders to consider giving you the money.
Compare the Available Lines of Credit to Your Business
Upon determining your eligibility, you can now start to explore your options. Business credit lines vary from being short term to long term and being secured and unsecured. They may also 0pbe obtained from banks or online lenders. Each come with their pros and cons. You have to basically concentrate on finding out which one is ideal for your business.
Prepare the Necessary Documentation
Once you have decided on the line of credit, carry out a detailed investigation of the specified documents needed for its application. It may include your basic information such as ID and social security number. Business information, such as business name, ownership type, tax ID and the type of industry it operates in, should also be provided. Additionally, you are required to include both personal and business tax returns and credit scores.
Finalize the Application
After gathering the necessary documents, you can now complete your application. There are lenders that offer fast and efficient online application services while there are others like banks or the SBA, that require physical submission. The later may take a longer duration to review the document and give you a response. Hence, always consider how urgent you need the funds when deciding on the type of line of credit to use.
Checking your eligibility, comparing the available lines of credit, preparing the necessary documentation and finalizing your application are a few guidelines that may be followed when applying for a line of credit.