Business lines of credit are loans that allow you to borrow a flexible sum of money to meet short-term business financing needs. Business owners who are just starting or who have poor credit often opt for these loans over more traditional business loans. Here are some of the steps involved in getting a business line of credit.
Review Your Company’s Qualifications
Making sure that your business will likely qualify for a business line of credit will save you time and hassle down the road. Some of the qualifications you and your company may have to meet include:
- Having a personal credit score of 600 or higher, although some lenders will accept a lower credit score
- Displaying a minimum annual business revenue of $25,000 to $100,000, depending on the lender
- Showing that you have been in business for at least three to six months or longer
- Proving that you can offer collateral. This is especially important if you are just starting a business or have poor credit
Providing proof of these qualifications shows the lender that you will be able to pay the loan back and that they are not taking a huge risk by giving you the loan.
There are many lenders out there who are willing to provide businesses with lines of credit. So, compare your options before deciding on who to work with. Some other factors to think about are:
- Whether you want a short-term or a long-term business line of credit, with short-term lines being easier to qualify for but long-term lines having lower interest rates
- Whether you want to take out a secured or unsecured line of credit
- Whether you want to go through a bank or an online lender for your line of credit, with banks offering more desirable terms and online lenders offering more variety
Consider all of your options before committing.
Prepare Your Application and Apply
In addition to your qualifications, prepare and organize information such as basic business information, credit score reports, business and personal tax returns, and other business financial statements such as balance sheets. After this information is prepared, you are ready to apply for your business line of credit. Keep an eye out for phone calls or emails from the lender in case they have any questions.
Seek Expert Assistance
These steps can help ensure that you make an informed decision when applying for a business line of credit and that your application process goes smoothly. Contact BluWav Capital today.
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