Whether you have just launched a business or have been an entrepreneur for a while, you will need to access business credit at least occasionally. The business line of credit is an especially popular choice for small business owners because of the flexibility it offers.
Building Your Business Credit with a Line of Credit
A line of credit works much the same way as a business credit card. You can charge up to your credit line each month and then free up available credit as you make payments. The major difference between a business credit card and a line of credit is that most lenders provide a much higher credit limit on the latter.
What Do Lenders Require?
Financial institutions look for businesses with a high credit score, collateral they can pledge at the time of the loan, and decent cash flow. Meeting the strict criteria of banks can be challenging for new small business owners or those who have had credit issues in the past. Nonetheless, a line of credit for your business offers several advantages. These include:
- Immediate cash flow improvement
- Interest rates tend to be lower than installment loans
- Flexibility to buy on credit multiple times without needing to apply for a new loan each time you need access to business capital
- Can serve as an emergency backup fund
Unfortunately, securing a line of credit for your business isn’t always easy. Traditional lenders may not even consider your application if you have been in business for less than two years or don’t have a piece of valuable equipment to offer as collateral.
GM Capital Group Can Help
We work with small business owners in all types of situations here at GM Capital Group. We invite you to contact us to learn more about our business credit options today.