How To Get Approved for Business Lines of Credit
Business lines of credit are a must for small business owners. With access to instant capital for small and medium purchases, it’s easy to handle the day-to-day needs of your business. Credit allows you to get better rates on inventory purchases and upgrade hardware and software when required. What should you do to get approved?
Tips for Getting Approved for Business Lines of Credit
The application process for business credit isn’t as complex as taking out a term loan, but there are some basics you need to keep in mind:
- Take care of your credit: Financial institutions will look at your credit score when deciding whether or not to approve business credit. An excellent score makes approval easier and usually results in better rates.
- Find the right lender: You can apply for business lines of credit with a traditional bank, online lender or an organization that offers both options. It’s important to ask about estimated interest rates and any additional fees before choosing the best lender for your needs.
- Provide all recommended documentation: It’s not enough to request credit. You have to show why your business is a good investment for the lender. That means showing hard data about annual revenue, past loans, and company assets.
- Understand your business: If you can speak with authority about financial documents, it inspires confidence in your abilities to manage your business credit professionally. Lenders want to know that you understand how cash flow works and have clear goals for business growth.
Building strong credit is an ongoing process. When you pay invoices promptly, avoid debt and use money wisely, it has a great effect on your company’s rating. Of course, there’s nothing wrong with having a business credit card and a line of credit at the same time, as long as both are kept in excellent shape.
What You Need During the Application Process
The specific documentation required for a credit application depends on whether you’re applying online or in person. When meeting one-on-one with a bank officer, take along physical copies of the following documents:
- Company tax returns
- Personal tax returns (if you’re the business owner)
- Profit and loss statements
- Company balance sheet
- Bank account statements
- Credit card statements (if you have a business credit card)
The good news is that the more positive documentation you provide, the better your chances of getting approved for lines of credit with low-interest rates. There are simplified applications available from some online lenders, but you may have to trade convenience and fast approval for higher interest and lower credit limits.
Don’t shy away from applying for amazing business credit. As long as you go prepared, you have a great chance of getting approved for this versatile business tool.