A simple way to build your corporate credit is by using a small business line of credit to show lenders you can easily borrow and repay money in a timely manner. A small business line of credit is a simple way to dip into emergency cash funds when your business is struggling.
Unlike a credit card a small business line of credit provides you with an opportunity to borrow money up to a certain amount but you won't pay any fees or interest on the loan until you borrow the money. Some business credit cards charge you annual fees so you may be stuck paying just to have the card available. A small business line of credit on the other hand provides you with money but it's up to you to draw on the money as you please.
The great thing about a small business line of credit is that it's actually pretty easy to acquire. Most lenders provide a small business line of credit but your credit rating, business plan, and financial records will decide whether or not you are worthy of receiving the loan.
A small business line of credit can be used to expand your working capital and provide you with the cash reserves you need to become a reputable and strong institution. The great part about small business lines of credit is that you usually don't need to offer up any type of collateral to secure the loan. The only time you need collateral is due to your credit rating. If your personal and business credit rating are not strong, collateral is the only way in which you can secure the line of credit you need.
To find out which lenders you can work with, you need to talk to them about their lending restrictions. You must be able to find one that doesn't ask you to provide collateral for the loan. Ask them what their credit rating cut off is so you can find out if you meet the cut off or if you need to strengthen your score before you apply for a loan.
Offer the lender 2 years worth of financial statements. This will help them see that you have a strong cash flow and that you will easily be able to afford to repay the small business line of credit in a timely manner. Cash flow projections are a big part of applying for the loan and actually getting approved for the loan.
The amount of money you can acquire with small business lines of credit are based on your business needs. How much money do you need and how do you plan to use it? If a lender feels that you are asking for too much money, they may not provide you with the money for a loan. Create a list along with the costs of all the various things you need to purchase so the lender can see exactly how you are using the money and that you are not putting the money to waste.
Depending upon the age of your small business, you may need to use your personal credit score to secure the loan. The lender must be able to trust in your ability to control your spending and repay your debts. Take a look at your personal credit rating and make sure its higher than 700 in order to gain approval for a loan.
Watch the interest and principal on a small business line of credit. Some can be incredibly high and it can take you years to repay them. Look for a loan that has flexible repayment terms so you can afford to keep the loan.
Corporate Credit Concepts specializes in small business line of credit. For more information about small business line of credit and how it might benefit your business, please CLICK HERE for a free phone consultation.