Whether you’re struggling with slow cash flow or simply looking for new capital to expand your business, getting a business line of credit gives you an incredible range of new opportunities.
Because of the risk that many lenders take in giving credit to a new business, you’ll need to be prepared in order to gain a line of credit for your business. These three tips will help you simplify the process for yourself, your business, and your lender.
Assess whether you need a secured or unsecured line of credit
Many lenders will be hesitant to offer an unsecured line of credit to new businesses, but will change their mind if presented with a sustainable business model that’s got long-term cash flow and reasonable profit margins.
If your business is established and already successful, you may benefit from a credit source that’s unsecured. Keep in mind that this will often involve a higher interest rate than a secured line of credit.
Offer your bank a plan for steady and consistent repayment
Creditors need to know that their money will be returned, and very few will offer a line of credit to a business without a sustainable business model. Give your bank an actionable repayment plan to help it process your application for credit.
This generally means showing your creditor a business model that works, any data that supports your business, and copies of key accounts and other financial records that indicate your business is able to repay its credit without any issues.
Prepare your accounting documents and business records
Nothing will delay your application for a business line of credit more than a lack of documentation. Prepare all of your documents in advance and have them certified by a professional to ensure that your application is processed smoothly.
The more documentation you can offer your creditors, the greater the likelihood of your credit being granted. Provide account statements, copies of your income, and any other information that you’re asked for when applying for a line of credit.