3 Proven Ways to Earn a Line of Credit for Your Company
Businesses, whether large Fortune 500 companies or small businesses, need a bit of financial help every now and then. Sometimes things don’t go according to plan, like when a client is late on their payment, if sales are down, or if unexpected expenses arise. All of these incidents can lead to a cash flow problem and put your business in serious jeopardy. Many businesses will turn to either a loan or a line of credit to solve these problems.
When you need cash fast to fix that cash flow problem, you don’t want to wait around for a loan to kick in or to have it be paid out all at once. For example, there are times when you need $5,000 here and another $5,000 there, but not $10,000 all at once. There’s an easy solution to that problem, and it’s called a line of credit. It’s similar to a credit card, where you have a set limit and you can borrow however much you need at any given moment. You’ll make payments and accrue interest, as with a loan or credit card, but this option is more flexible than a loan, making it perfect for small businesses.
There are three different options for lines of credit for you business including bank lines, online lender lines, and asset-backed lines. When trying to get this credit from a bank, first start with a bank you already have a relationship with. It will be much easier to get a line with them than with a bank you have never done business with. Banks tend to have the best rates, but the qualifying process is also the longest.
For online lenders, the Internet is rife with options for your business. While banks will have the better prices, online lenders can serve more people by taking higher risks. That risk will then translate into higher rates. That being said, online lenders can typically secure you a line of credit in a much shorter time period, some even within 24 hours, which may be ideal depending on your situation.
Finally, asset-backed lines operate much like a putting up your house or car for collateral. Except, in this case, you would put up part of your business such as equipment or inventory. This option provides you with more money if you need a higher limit for your business expenses.
No matter which line of credit you end up with, just know that there are options available to suit your monetary needs, your business needs and your credit score needs. There’s no reason for you to be left in a cash flow rut when a simple solution waits.