Business lines of credit are very popular financing tools, and with good reason: They offer flexible, on-demand spending power. To boost your business’s chances of obtaining one, just follow these tips.
Figure Out Where Your Business Stands
To put together a strong application for a line of credit, you’ll need to know how your business shapes up in a variety of areas. Important information includes your personal and business credit scores, your business’s yearly revenue, its time in operation, and whether or not your business can offer collateral to secure the line of credit. Knowing such information can help you narrow down your options; for example, some lenders may have a high minimum credit score requirement, while others may not want to extend financing without collateral securing it.
Analyze Your Options
Once you know where your business stands, you can begin analyzing different options for your line of credit. Chief among them are traditional banks and online lenders. Financing writer Dennis Shirshikov has put together some general but helpful guidelines that may be a good starting point.
There are many differences between the two, but to sum up, online lenders may be the way to go for newer businesses that need a speedy funding solution. They have quicker, less strenuous application processes. However, traditional lenders can be a powerful ally for well-established businesses.
Choose and Apply
Once you’ve picked where to apply for your line of credit, it’s time to gather your documentation and move forward. You’ll need documentation such as your personal and business tax returns and credit reports, business information (covering its name, legal entity, and so on), and financial information. The lender may also require legal agreements and contracts.
After you apply, be sure to promptly answer any follow-up questions the lender has. That will speed up the process and hopefully give you access to your new line of credit sooner. Once it’s available, enjoy your new spending power!
Star Capital USA’s other blog posts are full of coverage on additional business topics, so be sure to check them out.
