you may be looking to maintain your business or expand your business to some new region. Whatever it may be the business lines of credit provides your small business all the financial freedom it needs to become a successful one. Since it offers the regular and stable cash flow into your business, you can take advantage of your equipment updating, supplies, inventory sales and reserving the emergency funds. In order to apply for the business lines of credit you must have been in business at least for 2 years. Setting up some smaller lines of credit along with your supplier can help you improving your business credit score and also it will help you get business lines of credit
You can apply for business lines of credit by following the below instructions.
Before applying for the business line of credit rates you need to draft a plan. Prepare an elaborated business plan which should include everything about your business, your business description, business short and long term goals, for which the required money is going to get used for etc. you can visit the official website of Small Business Administration (SBA) to know more on how your business plan should be prepared.
Gather all your personal and business documents which includes the documents like personal tax returns, business tax returns, your business annual income, profit and loss statement etc
Find out how much of the business credit your business will need. It is subject to get change based on the qualification criteria.
- As with all other loan process, here too you need to order the credit reports of your business and personal from all three credit bureaus. Try to spot the errors, if any. Check every statement of your report. Nearly 20% of people every year approach the credit bureaus because of the discrepancies. If you find out any discrepancy report them immediately. Small errors will be rectified in not more than 30 days. In case of discrepancies in your report you should attach this copy along with your line of credit rates application so that they will know that you were losing your credit score just because of the inaccuracies.
- Now you should collect all these documents to your desired local bank to apply for securing business lines of credit. Depending on how much your documents meets the bank’s criteria you may be avail for the unsecured or secured lines of credit. Getting qualify for the unsecured lines of credit is far better. So that you don’t need to put some bulk some amount or any asset as collateral.
- Providing the unsecured business lines of credit is much riskier for your financial institution. But it is very favorable for your business. When you get qualify for the secured line of credit your bank or lender will ask you some collateral. It may be anything like personal real estate, commercial real estate, securities, CDs or any other business assets.
- If you don’t want to put up any collateral to obtain the business lines of credit, you can consider lowering your required amount. It is one of the key factors which determine whether you can give secured or unsecured lines of credit. Even after reducing the amount your lender is not bending still slightly you can consider applying in some other bank.
If still you get rejected, take your time to improve your business credit score. You can improve it by opening up to 5 corporate accounts with various suppliers who report your business credit information to the credit bureaus.