If you’re like most business owners, chances are you’re going to hit a slight road block with your company at some point. Whether the cause is a slow off season, cramped office space, or series of failed marketing campaigns, the solution is often the same: a quick infusion of cash. There are many funding options available to small businesses, but here’s what you need to know before applying for lines of credit.
How You Want To Use It
Luckily, credit lines are among the more flexible sources of funding. You can use these funds to pay for a variety of different things, but some lenders may be more strict than others. In order to apply, it’s a good idea to have a list of things you anticipate spending the money on. The more specific you can get, the better. Lending companies like to see that you have a plan to not only spend, but pay back what you owe.
How High You Want Your Line Limit
Before you start making grand plans for all the cash you’re about to have access to, keep in mind that your line limit is going to be based on your company’s income. Each company will have a different process for determining that amount, but there’s a chance it’s not as high as you’re imagining. If you can maintain a good working relationship with your lender, you may be able to ask for a line limit increase down the road.
How High Your Credit Score Is
A line of credit is a quick, convenient way of getting cash for your business, which is why it can come with some pretty lofty application requirements. Lenders want to see that you have a good history of paying your debt, so they’ll likely want to know you have an impressive credit score to match. You may have to use your personal score if your business hasn’t been operating long enough to establish one. If your score is a little too low, you may want to wait and work on your finances before trying to submit an application.
Business lines of credit can be incredibly useful for businesses who don’t want the hassle that comes with traditional loans or the high fees associated with credit cards. So long as you can meet the strict requirements and keep up with the obligations of keeping those lines open, your business can utilize these convenient tools.
