Do you have reason to believe that a business line of credit could be the right financial decision for your company? Have you compared this option to many others? Do you know the pros and cons?
There are nearly 30 million small businesses in the United States alone. While some of these companies never have to turn to outside funding, many others have come to find that it’s the best way to grow.
There are several key steps to take if you want to secure a credit line. It may not be as simple as you would like, but it’s far from a challenge either. With the right approach, you should be able to learn more and move through the application process in no time at all.
Here are the many steps you will probably have to take if you want to secure a credit line for your business:
1. Know What You Need to Qualify
You should never assume that you will qualify for a business line of credit. Every lender has eligibility requirements, and you should become familiar with each and every one.
For example, most require that you have been in business for a minimum of six months. So, if you’re part of a startup or a company that has yet to open its doors, it’s not likely that you will qualify.
Most lenders also have annual revenue requirements in place, such as a minimum of $50,000.
Note: check on the eligibility requirements upfront so that you don’t waste your time if you know you won’t qualify.
2. Think About How Much Money You Need
It’s one thing to know that you qualify for a business line of credit, but another thing entirely to get an understanding of how much you can borrow.
Do you need $10,000? How about $50,000? What about $100,000 or more?
You should think about this long and hard, as you don’t want to borrow more or less than what you actually need.
3. Search for a Lender
Every lender has a different application process, so you’ll want to compare several before you make a final decision.
Also, keep in mind that lenders don’t have the same eligibility requirements. So, just because one lender turns you down doesn’t mean that another one will do the same.
The best way to move through the process is to spend your time online. This gives you the opportunity to learn as much as possible about each lender, as well as general details associated with a business line of credit.
4. Complete an Application
Now that things are moving forward, you will want to complete an application for a business line of credit. As you do so, make sure you provide all the necessary information. Just as important, every detail should be 100 percent accurate.
If you put your mind to it, you may be able to complete the application process in an hour or so. Of course, you don’t want to rush things. You need to make sure everything is just right before submitting it to the lender for review.
5. Ask Questions
If you receive an approval, it’s time to ask your lender a variety of questions. How much money can I borrow? What is the interest rate? How long do I have to make a decision? Are there any fees associated with the account?
By asking these questions, among many others, you will gain a better understanding of the business line of credit and everything it has to offer.
Tip: if you are not comfortable asking your lender questions, there’s a good chance you are working with the wrong bank.
These are among the more important steps to take if you want to secure a credit line for your business. Other details will come up along the way, but a focus on these will have you on the right track from start to finish.
Do you have any experience securing a business line of credit? Do you know which steps you need to take as the process moves forward? Are you aware of any mistakes to avoid? Share your past experiences and advice in the comment section below. You may be able to help another small business owner make a better decision.