In today’s article will be outlining a basic primer on business lines of credit. After reading this you should have an understanding of what factors go into the approval process and where you should go to look for this source of funding for your company. In short, you will need to demonstrate good credit and have a positive revenue to expense ratio while also showing that your company has a solid history. We will discuss this in further detail in today’s article.
As mentioned you will need to have a good business credit score in order to get business lines of credit from high quality lenders. It is possible to get high interest loans or lines of credit for your company through nontraditional lenders but this is not ideal. If you have not yet built up your credit for your company I recommend that you attempt to run your short term agreements such as your net 30 agreements through your credit whenever possible.
Your businesses revenue as it compares to your expenses is an important factor to consider when you are looking to obtain a credit line. Not only is this important for the operation of your company but it also indicates that you will have enough money in any given month to pay off the amount which you owe. This is important to lenders and certain lenders will require that you have a maximum expense ratios.
Getting this information mind I recommend that you contact your local small business administration office for assistance in finding an appropriate lender for your needs. They should be able to go over your financial documents to see who would likely qualify you for a loan and they can also provide you with additional information on the requirements for various lenders. You should also ask if there are any credit lines that fall under the loan guarantee program as this will ensure you lower rates and a greater likelihood of being accepted.
So in short you will want to make sure that you have a good business credit score before applying for a business lines of credit. You also want to keep your expenses down while keeping your revenue up in order to improve this ratio and once you are ready you will want to discuss your options with the local chapter of the small business administration in your area. There our consultants should be able to get you on your way in finding an appropriate lender who will ultimately approve you for your loan.