Three Things You Should Know about Business Lines of Credit
A business line of credit is one of the more popular forms of accessing revenue to obtain cash flow concerns, purchase new equipment, or simply ramp up production to meet consumer demand for your business.
Short term business loans, SBA loans, merchant cash advances (or any one of the several types of loans available) are all ideal choices when in a crunch. However, a business line of credit is very similar to having business credit card. It provides a quick stream of revenue at a moment’s notice, meaning unexpected business expenses can be covered and paid back at a later date.
Like any business decision to access extra funds, careful planning is pertinent. So, here are few steps to take and get the most out of a business line of credit for your operation.
Plan Ahead and Apply Early
Even though production may be brisk and your business has a steady cash flow, this is the ideal time to apply for a business line of credit. There are a few reasons for this. First of all, your business’ financials look solid on paper, you have sufficient amount of time to research the best rates, and you can develop a continued relationship with your bank. It also eliminates making any hasty decisions or avoiding higher rates if you’re in a rush. Remember, banks like doing business with the right clients. Working with them more closely can help your business over the long term.
How to Obtain a Business Line of Credit
According to the Bank of America, a business line of credit is unsecured debt so collateral is not required. Even though credit requirements may vary, most will require a business to have been under current ownership for a certain period of time. Also, if you apply for a business line of credit of more than $100,000, you may need to secure it with a blanket lien on assets, or provide a certificate of deposit.
Overall Benefits and Why Consider One
Business lines of credit are popular for many reasons. Variable rates are available on sums ranging from $10,000 to $100,000 plus interest rates are commonly lower than high-limit business credit cards. Plus, keeping a line of credit in good standing just helps maintain your business’ credit rating and build a solid credit profile.
Any business owner wants growth over the long term. A business line of credit is just on way of achieving this. They are much more reasonable than interest-rich hard money loans, direct loans or merchant cash advances. So, for additional details contact your local bank or lender to see what options are available and how your business can benefit from a line of credit.