Credit lines have been one of the most popular cash flow management tools for companies in the U.S. for decades, and for good reason. They are flexible, they can be used to address any cash flow need that falls within their limit, and with the right assets backing them, they can also be quite inexpensive. If you have never applied for business lines of credit before, there are a few steps to it, but it is not as complex as a loan to purchase an asset. In fact, most credit line approval processes are designed to be easy to navigate.
1. Research Your Lenders
There are a few common requirements for credit lines like your basic business information, proof of insurance, and proof of collateral asset ownership or value. Beyond that, the particulars are unique from one lender to the next. Proper research gives you a chance to compare shop for both interest costs and simplified application processes. Use that opportunity to make the whole proposition easier on yourself.
2. Prepare Your Financial Documentation
Your application package needs to substantiate your income with financial statements in addition to providing information about your location, tax ID, and other important business information. Pull together bank statements, projections, and income statements from your own accounting people to show that you can afford the payments even if the credit line winds up maxed out for some reason. That makes it easy to approve your business.
3. Document Your Collateral’s Value Clearly
The most common asset to use when applying for lines of credit is real estate, and each lender offers a different LTV based on the land value and your credit line. If you do find someone who offers credit against equipment, the same principles apply but you generally do not get as high an account limit. Either way, you need to demonstrate your ownership of the collateral and document any other loans against it or issues that might affect resale if the credit line is foreclosed upon.
4. Be Ready To Communicate
Like many financing application processes, there is a certain amount of back and forth when negotiating lines of credit for small businesses. Often, the approval process is held up because of missed messages or borrowers who do not prioritize fast responses to queries. Be prepared to offer up additional requested information and to confirm approval amounts so you can do your part to get a credit line approval quickly. If you do, you will be surprised at how easy the process can be.
Abundant Wealth Financial offers accessible and flexible lines of credit for new and established businesses. Contact our offices today to get the capital you need.