There are many types of small businesses looking for financing resources. Banks are no longer a sure bet when it comes to loans and lines of credit. Amendments of regulations and strict qualifying requirements can make traditional business financing options unattainable.
Proprietors are searching for alternatives in order to keep their doors open. If you’re a small business owner, who’s been in business for at least six months, do you know where to turn if all of your other methods have been exhausted?
Small Business Credit Cards and Unsecured Lines of Credit offer many advantages in comparison to banks and lenders. The importance of maintaining a good credit score is paramount both personally and professionally, however these funding alternatives do not always require a credit check or stipulate collateral. A credit line gives your business flexibility and growth potential. Even if you have bad credit, no credit, or do not qualify for bank loans; these funds may be just what you need.
Small Business Credit Cards
One of many unspoken tools employed in business financing is the small business credit card. This is due to its highly customizable features and accessibility. Suppliers usually prefer payments by credit card to ensure a prompt secure settling of accounts. Credit cards also help your business stay competitive by making sure your stock stays current and your products are in demand.
Credit cards come with as well. The biggest risk to watch for is the requirements of recently established businesses. Some creditors have a caveat for approval if your business is less than six months old. In order for the credit line to be approved, the credit card must temporarily be included on the proprietor’s personal credit report.
The simplest way to avoid this issue is to wait six months or longer before opening any business-related credit lines. If that is not an option, do your research. There are credit card companies that will approve caveat-free small business credit cards if the business owner can show proof of good credit.
Unsecured Credit Lines
For larger expenses, an unsecured credit line is a better choice. It offers the same flexibility as a small business credit card, but the interest rate is lower and the limit is higher. It is easier to qualify for than the credit card, but proof that your business credit is in good standing is still required. This is where the option of collateral comes into play. You may want to put some assets on the table to stand in place of any debt you acquire. A collateral agreement will guard your business against falling into the danger zone.
The Realities of Business Credit
Before applying for any credit lines, it’s best to have your ducks in a row. Make it your goal to obtain business credit and keep it in good standing from the time you open your doors. That way, the approval process isn’t a gamble. Your unsecured credit line and other funding will be there when you need it.