How to Get a Line of Credit for Your Small Business
If you need funding for your business, odds are you’re going to consider lines of credit. A business line of credit serves as a revolving form of financing for businesses. When it comes to financing, most businesses need extra help. When you need extra cash right away, a line of credit might be your best option. Here’s how you can get a line of credit for your small business.
Find Out if You Qualify
In order to find out if you qualify for a business line of credit, you need to apply. You can figure out if you are more likely to qualify by taking a look at your business. You need to consider your credit score, business history and your monthly and annual revenue. These are the areas that lenders are going to look at before making a decision. You need to make sure that the lender can tell that you know how to manage your business’s finances and that you have a strong business plan for the future. In addition, you’ll want to decide between a long-term or short-term line of credit.
Compare Credit Options
Always make sure that you check for different options before settling on one line of credit. Generally, you have a choice between traditional bank lines of credit and online lenders. Traditional bank credit lines tend to be more affordable with better terms. The online lenders, on the other hand, tend to have less affordability but their requirements tend to be less strict than banks.
Know the Requirements
Before you apply, make sure that you understand the general requirements. While some banks will vary in what they require of you, you need to make sure that you have the required time in business, the required revenue and credit score for that particular lender.
Gather Financial Documents
Your last step in applying for a line of credit is to get all of your documents in order. The documents that you need generally include:
- Personal information
- Financial statements
- Bank statements
- Information about stakeholders
- Debt schedule
- Legal documents
- Tax returns
Make sure to have all of your documents ahead of time, it will streamline the process.
Once you apply for your line of credit, there’s a short waiting period. As long as you have everything together, it shouldn’t be a daunting process. Lines of credit can benefit your business by providing you with the funds to take care of your company.