Secure a Credit Line for Your Business in 5 Steps
Are you hoping to secure a credit line for your business in the near future? Are you ready to move forward, but a bit unsure of the steps you need to take?
Securing a credit line for your business is easier than it appears.
On the surface, it’s easy to believe that this is a complex process that will take entirely too much time.
While there is no denying the paperwork required to apply for a credit line for your business, don’t let this stop you from taking action.
If you realize that this is a positive financial decision for your company, you shouldn’t hesitate to push the process forward.
Now, let’s take a look at five key steps you should take to secure a credit line for your business:
1. Understand What It Is
You don’t want to apply for a business line of credit until you are 100 percent sure of what it is and how it can help your company.
Simply put, it provides access to revolving capital that works in a similar manner as a credit card. The provider fronts the money needed, and you pay it back.
When compared to a business credit card, the primary advantage is the ability to potentially secure a lower
APR, thus saving you money when you borrow.
2. Know the Qualifications
While the eligibility requirements differ from one lender to the next, some qualifications remain pretty much the same.
For example, you will need to prove that you have been in business a minimum of six months.
Also, most lenders require that you have annual revenue of $50,000 or more.
There are exceptions with these “rules,” so it’s important to speak directly with the lender about the qualifications you must meet. This alone will give you a better idea of if you should continue forward with the process, or take a step back for the time being.
3. Know What You Need
It’s impossible to know how much you will qualify for until you complete an application, but make sure you have a number in mind as you begin the process. Knowing what you want out of the process will help you get there in the proper timeframe.
For instance, you may realize that you need a minimum of $25,000. If you are unable to secure this through a line of credit, you may need to look into other options.
Tip: some lenders may offer you a larger line of credit than others, so don’t hesitate to shop around. It’s good practice to speak with a minimum of three lenders.
4. Complete an Application
Depending on your approach and the lender, you can do this in one of three ways: online, via telephone, or in person.
An application for a business line of credit will require some detailed information, so make sure you give yourself plenty of time to work through each detail in a thoughtful manner.
If you run into any problems or don’t know an answer, contact your loan specialist for guidance. You don’t want to supply inaccurate information, as this can complicate the approval process.
Note: ask your lender how long it will take to provide an answer on your application. This will give you a clear idea of how long you’ll have to wait, which makes it easier for you to plan your finances accordingly in the meantime.
5. Read the Terms and Conditions
Imagine this: you have received an approval for a business line of credit. Congratulations!
Now, before you sign on the dotted line, you should carefully review the terms and conditions. It can take some time to do this, but it’s important to focus on each and every detail.
If there is anything you don’t understand, such as the interest rate or how your payment is calculated, ask your loan officer for clarification before you do anything else. You want to clear the air before taking this final step.
Many business owners believe that it will take many months or longer to secure a line of credit.
Yes, you could run into some roadblocks along the way. And yes, it’s possible that your application could be denied.
Despite these uncertainties, don’t let a lack of knowledge or time hold you back from securing the line of credit you need to grow your business. As long as you are patient and willing to move forward one step at a time, everything will come together.
A business line of credit is not the right choice for every company, but it could be exactly what you have been searching for.
Are you interested in securing a credit line for your business? Have you gone through this process in the past? Don’t hesitate to share your questions, advice, and feedback in the comment section below.