Lines of credit are like the Holy Grail for small business owners. These financing tools are incredibly powerful, but many people also feel like they’re impossible to find. That said, there are many ways for an owner to qualify if they’re willing to think outside of the box. That can put funding within reach for a variety of business needs.
What Are the Traditional Requirements for a Line of Credit?
Normally, lines of credit follow pretty much the same general requirements as conventional loans. To qualify, your business needs several years of operation, consistent annual revenue, strong cash flow, and an impeccable credit score. This is good news if you have decent credit since you can probably get unsecured credit without issues.
Unfortunately, many small businesses have trouble reaching all of those things. The good news is that there are a few ways to make things easier on yourself. One is to put up collateral. You can secure a line of credit using inventory, real estate, vehicles (sometimes), or equipment. This lowers the other requirements to make getting approved easier.
What Alternatives Does a Small Business Have to Conventional Lines of Credit?
Conventional business credit isn’t the only door open to you. There are several other options depending on your goals and time in business.
One method is to approach a lender about financing from the Small Business Administration. The SBA can help you get a small business loan or line of credit that meets your objectives. You may be able to use the funds to remodel your business, purchase inventory or take care of similar needs. These lines of credit cap out at $5 million, but your total amount depends on revenue.
Another option is business credit cards, which operate similarly to a line of credit and have lower requirements for credit score. The only downside is that any credit card carries a higher interest rate than lines of credit. That means you need to be extra careful with how you spend the money and how you repay it. Still, credit cards can be a great way to balance out your cash flow.
Last but not least is crowdfunding. This relatively new method of obtaining financing isn’t quite like a line of credit, but it can be used to get support for day-to-day activities. If you need to upgrade computer equipment or improve other facets of your business, it’s worth looking into.
Abundant Wealth Financial offers accessible and unsecured lines of credit for new and existing businesses of all types. Contact our offices today to get the funding you need.