A line of credit is a business loan that helps small businesses who have a short-term need for money. This might be used for supplies or inventory, or it might be used to help maintain cash flow of the business. What distinguishes a line of credit from a credit card is that the interest rate is typically much lower with the former. Also, this allows you to borrow from a credit account as needed, while you make payments monthly.
Pursuing Business Credit
There are a few different things required to get a line of credit, which we will go over now.
Building good credit history
Paying your bills on time and keeping a good credit history for your business is essential and can make your more likely to get a loan.
Doing your research
Be sure to check with a few different lenders before you choose one. Make sure you ask about interest rates and loan terms and compare them to what you need.
Show a positive cash flow
Lenders will want to look at your revenue, past, present, and future. You’ll need to be able to show that you have money coming in, which means you can repay the loan.
Avoid maxing out your credit cards
Maxing out your cards can hurt your credit score and make you less likely to be approved for loans. It’s better to avoid using your credit cards to the max, instead of using maybe 35% of the amount available.
Start with a small loan
If your credit isn’t perfect, it might be best to start with a small loan and work your way up as your credit history moves in a positive direction.
Apply before you need money
The best time to apply is when your sales are up and your numbers are great. If you pay it back immediately, you’ll establish good credit which can lead to loans in the future.
Contact Us to Learn More
If you are interested in more information about a business line of credit, contact us at Legacy Capital Lending. We would be more than happy to answer your questions and give professional insight to assist you.