5 Tips For Getting A Business Line Of Credit

Business Line Of Credit

Taking out a business line of credit (BLOC) from your bank can be a great way to finance your small business and help you get started. If you’re trying to get an initial BLOC but aren’t sure where to start, you’ve come to the right place! Here are five tips that can help you get the BLOC you need for your business.

1) Understanding The Importance Of Credit

Small businesses are primarily assessed on their creditworthiness, not their cash flow or profitability. Having a solid business credit score can help you secure loans for your new company. However, if you’re just starting out with no credit history, applying for a line of credit may seem impossible. Thankfully, it’s easier than ever to start building good financial habits that will boost your score and make it easier to get approved down the road!

2) Repayment Terms

Interest rates on business credit cards tend to be higher than personal credit cards—for good reason. If you’re a low-risk customer, it’s more likely that you’ll pay your bills in full and on time.

3) Personal Guarantee

In order to prove you’re a trusted and reliable asset, you can guarantee a business line of credit with your personal assets. While not ideal, it may be your only option to establish business credit if you don’t have any in your name. You may want to ask close friends or family members to help co-sign on a line of credit as well—using their good name can prove useful in securing one of your own.

4) Location, Location, Location

Most bank lending officers will look at two things when they evaluate a loan application: how much money you need, and what your collateral is. If you want to increase your chances of getting approved for a business line of credit, it’s best to focus on improving these two areas of your application. (more...)

5) Business Structure

It’s always a good idea to have your business set up as an entity that falls into one of three categories: sole proprietorship, partnership or corporation. The type you choose will be largely determined by what you plan to do with your business and how much liability you are willing to assume. If you are looking for startup funding, it’s best to consult with a tax attorney or a certified public accountant first because they can better determine which option is most appropriate for your situation.

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