Hardware Store unsecured lines of creditCommunity businesses like Burch’s Hardware in Minneapolis, Minnesota stand as an example of the changing times. The store, which had been an Uptown staple for 80 years, has closed. It’s not the first victim of the recession, nor will it be the last. We’ve all seen the “store closing” or “going out of business” signs in the local windows. Some business owners are calling this economic downturn the final disappearing act for independent business.

The comparison is no surprise. Even in the lean months, employees have to be paid, overhead and in-store stock has to be maintained and covered, vendors accounts have to be settled. It’s all just part of the daily grind at your local hardware store. So what happens when the ends can no longer be met?

With naysayers piling up, businesses closing down, and a bleak future ahead, is there any hope of saving your friendly neighborhood hardware store? In times like these, hope comes from unexpected places. This article will examine how an unsecured line of credit can keep struggling businesses afloat.

The Balance of Present Funding Based on Future Revenue

Banks aren’t the only source for emergency loans. In fact, small business owners have had better luck getting necessary funding from unsecured lenders. How does it work?

Banks are tied to eligibility policies and qualifying regulations. In addition, they require assets as collateral in order to approve a loan. This means that even a respected, reputable, and responsible borrower runs the risk of losing property if they default on a traditional loan. Banks can only lend a helping hand to a point; after that, you are on your own. The key is to know what to do:

  1. Before you risk defaulting
  2. Before your credit score bars you from qualifying for future funding options.

If you feel yourself losing your financial grip on the daily operations of your business, go to the bank, but don’t take out another traditional loan. Ask about area lenders instead. Your bank can refer you to reputable lenders in your community. Take your time to shop around, find an affordable rate, and when you’re ready, ask about opening an unsecured line of credit.

Approaching a lender while your credit is still in good standing gives you several advantages:

  • It locks in a better interest rate and payment plan
  • It shows you are a reliable borrower
  • It gets you unrestricted funds when you need them
  • It keeps you in good standing with your bank

Even if your credit isn’t perfect, don’t worry. An unsecured lender can look at your sales record and give you a loan based on future revenue. The important thing is to treat an unsecured line of credit like a traditional loan. Don’t overspend, make payments on time so you avoid developing habitual debt, and use the line for emergencies only.

Setting these healthy spending boundaries even in hard financial circumstances, will help your business recover and stabilize faster.