Brief Guide to Business Line of Credit Requirements
While traditional banks often reject the business loan applications for newcomers with fresh ideas, business funding has observed growing bend towards a widely discussed topic in the world of start-up businesses; a business line of credit. So all of the entrepreneurs with the question running in their head with "how to get your business funded". In this article, we will discuss the different requirements to qualify and also the standards imposed for every business line of credit type.
Considering the fact that all the business line of credit options and requirements are out there, it's really important to take out a little time to determine your goals, the type of credit lines used and the options available to you as per the requirement mentioned below. The main point is to ensure you pre-qualify for the correct line of credit at the correct time which can bring a great impact on your funding success. So, let's discuss the requirements in details:
1. Traditional Unsecured Line of Credit
While taking the traditional route, you can easily obtain the business line of credit from the bank where you have to write checks for the expenses and purchase made by the company. Also, the accessible funds depend on the maximum limit set by any bank.
It's more on the need basis so it's not necessary to use it all. You can only spend what your company needs and can pay for interest on the amount spent than on the entire amount. It is also similar to the concept of business cards where you have the flexibility to repay the outstanding amount. With the help of the traditional line of credit, you can pay the outstanding balance in one go or can opt for minimum payment typically between 2.5% to 5% of the total balance.
Highlights of Traditional Line of Credit
- There is no requirement of collateral's
- The average interest rate is between 7 to 10%
- Flexibility of withdrawing funds as per your needs
Common Requirements for Traditional Line of Credit
- Good credit score of 680+
- Verifiable income per month for your business
- Entity Structure
2. Non-Traditional Unsecured Line of Credit
Another best way to get the answer for "how toget your business funded" is through the most popular line of credit: non-traditional business line of credit. The non-traditional business line of credit comes in the form of credit cards specifically meant for business. You can use business credit cards for cash advances and purchases. They only report to business credit agencies and also come with very high credit limits even if you are a startup or an existing business.
A business credit card can help a business owner with immediate cash and lot more. There are many benefits of using business cards instead of the personal card for the small business. You have to access the business-specific benefits like spending controls, employee cards and specialty services that are tailor made for your small business.
Highlights of Unsecured Line of Credit
- Use your credit line anywhere MasterCard and Visa is accepted
- No financials, collateral, proof of income needed
- Introductory Annual Percentage Rate at 0% on 6 to 9 to 15 months depends on the requirement
- Helps you keep your personal and business expenses separate
- Builds business credit score/report
Common Requirements for Unsecured Line of Credit
- Good credit score of 680+ and cc utilization should be under 50%
- Entity Structure such as LLC, Corporation etc
- No foreclosures, no bankruptcies and tax liens
- Business partners are accepted
Having any business line of credit available can help you get peace of mind and also help you get assured to select the right line of credit that is suitable for all your business needs. So, are you ready to apply for a line of credit to build your business's credit? Midwest Corporate Credit offers you the different line of credit suitable for your business type and needs. We only guide our clients to understand different lending products and the ones who do not list it to the personal credit agencies. This feature helps business owners to feel at home knowing that their personal credit scores are in safe hands from their business scores. Speak to our funding specialist at (844) 220-8826 to understand the basics of “how to get your business funded” and get all queries answered to your satisfaction. We believe in building relations so that your business develop into one big happy family.