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Grow Your Company With A Business Line Of Credit
Your cash flow will have a large impact on getting a line of credit. If you have a strong annual cash flow, lenders will find that you can easily qualify for a loan. Your business history will have an impact on your ability to gain approval for a business line of credit. Keeping strong financial records will help you as you apply for a loan. What is a business line of credit exactly? It is a revolving line of credit that does not come with fixed terms. You will agree to a set interest rate for the loan and the payment amount could fluctuate based on how much you borrow and if you borrow additional funds in the future. Depending upon what you are using the money for, lenders may talk to you about changing to a different loan in order to match it correctly to your purchases or investments. To get the best rates on business loans, you must consider what your business credit rating is. This rating needs to be closer to 100 in order to get lower rates. In order to have a higher business credit rating you need to start paying your vendors on time. Timely payments and having good relationships with them can go a long way in helping you to improve your business credit rating. If you are using your personal credit history to help you get a loan it is important that you understand what your score is so you can qualify for the best rates on a line of credit. The best credit ratings will get lower rates. Try and get your personal credit score to 720 or higher in order to qualify for the best rates. If you are using your personal credit, lenders will also ask for a few other things from you as well like your tax returns over the past 3 years. They will also ask you for copies of your personal income and will ask for bank statements over the past few months. What happens if you do not qualify for a business line of credit? You need to consider other financing options that can work for you. One option is to use a method known as invoice factoring. Factoring allows you to sell off your old invoices and you will get money in your account in 48 hours, usually up to 80 - 90 percent of the invoice amount. This way you do not have a lot of money sitting in your accounts receivables as you will have money to pay for your company's business expenses. The other nice thing is that it allows you to avoid dealing with the frustrating collection process of getting your customers to pay their bills. |
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